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Renewal Of Glass-Stegall "Under Discussion" In The House
A month ago Zero Hedge dubbed Gramm-Leach-Bliley the worst Bill ever passed. Its passage, coupled with a bunch of insane money printing leprechauns, presaged the ultimate collapse of Lehman, and was the main reason why capitalism nearly died last year (and why contrary to all you hear, is still in critical care). Yet from mere grumblings a month ago, the chorus of voices calling for a repeal of G-L-B, and a renewal of Glass-Steagall has reached a crescendo, and today Majority leader Steny Hoyer said that the renewal of the Glass-Steagall act was a distinct possibility.
The U.S. House is considering
reinstituting the Depression-era Glass-Steagall Act, which
barred bank holding companies from owning other financial
companies, Majority Leader Steny Hoyer said today.
A renewal of the 1933 law “is certainly under discussion”
by House members, Hoyer, a Maryland Democrat, told reporters in
Washington. The Glass-Steagall law was repealed in 1999.
Hoyer made the comments when asked whether Congress and the
Obama administration could do more to persuade banks to make
more business loans to get credit flowing into the economy.
“As someone who voted to repeal Glass-Steagall, maybe that
was a mistake,” Hoyer told reporters.
The repeal removed a regulatory obstacle to the $46.4
billion merger of Citicorp and Travelers Group Inc. to form
Citigroup Inc.
If this bill has even a snowball's chance of hell in passing, look for the crash in financial stocks and all high beta names to come faster than Barack Obama's next TV appearance.
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Fannie, Freddie Overseer May Seek More Treasury Aid
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ay8TEnSIckUk
shocking...
hey, at least FHA has assured us they won't need any taxpayer bailout....phew....
Glass Steagall would destroy GS; therefore it is unlikely it will pass. The O Team simply won't allow it.
Needs to happen.
I think the letter writing campaign to Senators on the Bernake re-appointment had some impact. Needs to happen on this issue as well. Even more so.
PLEASE WRITE YOUR REPS. & SENATORS ON RESTORING GLASS - STEAGALL
Agreed, this is something that should be reinstated. Turn back the clock on the failed policies of Robert Rubin.
yes, yes, yes.
write and phone your congress critters.
i will send an extensive note to my rep today....he is a member of barney's committee.
TD....how about seeing if he will agree to a telephonic interview with you? I'm sure his press people will freak out!
I don't know, they are only just waking up to the idea that we may need to cut spending.
US needs plan to tame debt soon, experts say Mon Dec 14, 2009 5:20pm EST
By Andy SullivanWASHINGTON, Dec 14 (Reuters) - The U.S. government must craft a plan next year to get its ballooning debt under control or face possible panic in financial markets, a bipartisan panel of budget experts said in a report on Monday.
http://www.reuters.com/article/idUSN1419042320091214?type=marketsNews
there are lots of checks left in the checkbook mscreant...no problem, all is good. we are the usa after all........
But what about all those poor, lonely stock brokers sitting back there in the shadows of my local Wells Fargo branch?
Buy them an extra large container of Jergens for Christmas.
Credit Suisse halted? What is this about Credit Suisse trading being halted? Anybody have insight?
From marketwatch:
http://www.marketwatch.com/story/credit-suisse-in-talks-to-settle-us-probe-2009-12-15?reflink=MW_news_stmp
Glass Steagall must be passed along with strict derivative reform to reduce systemic risk.
Derivatives must be transparent, reported in the financials, exchange traded, with collateral. They are no different than equity options and should be treated the same.
Only reason derivatives really exist is because of their inherent opacity and the reduced restrictions vs. options. Take that aspect away and you will probably just kill off most of the derivatives.
Agreed. CFMA 2000 is the other delinquent child bred by Phil Gramm. Repeal of G-S and approval of CFMA are two barrels on the same shotgun pointed at the World economy.
That realization has come too late to avoid the consequences, unfortunately. Derivatives are active land mines as we speak.....hidden everywhere and part of every thing. Like a virus.
Thanks for adding the CFMA. For some reason, that law is rarely mentioned. But IMO it is at least as important as the repeal of G-S which everyone seems to be familiar with.
link to Dylan Ratigan and Ed Perlmutter re: CFMA problems and proposed legislation
http://articles.moneycentral.msn.com/learn-how-to-invest/new-investor-ce...^cp_en-us_Money_investing-dispatch&fg=MSNmoney-Player-dispatch-video
The Enron loophole got ink during the CA electricity futures scam perpetrated by its namesake. Then more ink with the oil futures spike in Summer '08.
Everyone needs to google and read Commodity Futures Modernization Act 2000 to understand this destructive piece of legislation that set up the Big Cons.
Agreed. Stinks like turd. Wake up America.
Anything to keep the populist rage at bay for a little longer.
Ah, yes indeed, anything to deflect the concerns of the unwashed. Fascinating this sudden upsurge of concern with the interests of Main Street. I mean Obama yesterday with the "fat cats" crack, the business with Barney Frank yesterday as well and now Likud's fan boy, Steny Hoyer, with talk of the revival of GS. Why the jaded might even think it was orchestrated.
Tell ya what I think. I think this filthy weasel would do anything to keep his shiny ass in a House seat even it required making a disingenuous and condescending gesture to the hoi polloi. When the peoples' time eventually comes and the interrogations and show trials commence, trust me, Hoyer's case will be at or very near the top of the docket. Then perhaps we'll learn why its taken this snake so long to pay attention. Might his delay have had something to do with his economics, do you suspect?
Look at me! Look at me! I'm an honest politician, just like Ron Paul!
My response to all proposed financial regulation is the same: I'll believe it when an actual bill is passed and the President signs it.
my gold-coin-shitting unicorn is in the mail - FINALLY!!!
Steny neglected to mention the equal possibility of monkeys flying out of my hind quarters.
So if I put on the condom n-o-w, I can smile and hold my head high?
Glass-steagall remains in force. GLB only repealed a small and extra stupid portion of Glass-Steagall. As a reminder, European banks never had anything like a Glass-Steagall act weighing them down and Europe never had a housing bubble like this UNTIL the coordinated efforts of the American and European central banks to squish the interest rate in 2001. You might consider that you're charging in the wrong direction, Tyler.
Also....you may want to note that capitalism in America died during FDR's administration. What almost died last year was already a corpse - a pseudo-fascist economy. Of course, typical of politicians, the proposed cure to fascist strangulation is more fascism. I don't know why you would support that.
Mad gibbering from a True Believer
Isn't Glass Steagall partially a way to avoid talking about the impact of Community Reinvestment Act (CRA) as a major force in what happened in '08?
Off topic:
http://market-ticker.denninger.net/archives/1731-To-Congress-Your-Loan-H...
I call bullshit on the Community Reinvestment Act having anything at all to do with the crisis. Remember these two points whenever anyone tries to tell you CRA was responsible for the crash:
1. Institutions regulated under CRA were responsible for just over 6% of the loans considered 'subprime'.
http://www.occ.treas.gov/ftp/release/2008-136.htm
2. Three words: Commercial Real Estate. Nothing to do with CRA (or lending to "those people"), and yet the same sort of irresponsible lending based on impossible projections took place.
So, unless somehow that 6% of the subprime residential real estate market is responsible for everything else...
...or they'll slip a veiled G-S redux into HR 3962/Senate/Committee, etc.
Congress is not good at "turning back the hands of the clock." Also considering that G/S was passed under the Clinton Admin. there is even less of a chance. It should again remind all that when it comes to understanding the complexity of global financial markets Congress and the President just don't get it. With all the talk about G/S what about Sarbox? Another disaster...
In my opinion, a G-S reinstatement will happen, but ALL the current TBTF players will be "grandfathered" in.
Barry O knows better than to mess with the interests of his masters - and that goes DOUBLE for the "bought and paid for" Congresscritters....
yeah.....and Hank Paulson was the Preacher who presided over the shotgun marriage of BAC/ML and JPM/BEAR just one year ago !!
Wouldn't that be a beautiful unwind ??
You are right......all FUTURE marriages will be declared illegal. No more Kissin' Cousins.
hoyer is one of the most arrogant pigs in congress...it won't happen..
Legislate all the financial business out of the country and we will be perfectly safe. Right?
Name the ones that would leave.
Exactly, Dicksie ... I think the answer is "nobody we'd care about - if any".
The businesses and capital that might migrate to "unregulated places" will end up cratering in a continuing out-of-control fashion as we've seen globally in the last x years ... and then real investment dollars and capital absolutely WILL flow to the newly-safe & secure American banking system.
If this isn't absolutely clear by now, when will it ever be? If we are looking for confidence in a banking system, let's give people something to be truly confident IN.
somewhat related, master financial services sector man of the year and commercial real estate lender extraordinaire, Jeff Immelt, had this to say today:
"The worst is behind us in financial services," Immelt said."
Thank you Jeff. Can we count on this as much as the dividend on GE (Government Electric) common? You know, the one that you were not going to reduce. Oh, were we supposed to forget about that?
Every time I hear one of these guys say something like this I think of all the CEO's and government people telling us the same thing, just before the entire market melted down or their own firm.
this has been going on forever as you know.
it is interesting to read newspaper accounts from the 1929 through 30/31 era....i've read a few recently and I swear they are identical to what we are reading new.
+ 1
Hee-Hee-Hee!
It really is asounding.
This is my favorite from 'the economic messiah':
"We will not have any more crashes in our time." - John Maynard Keynes in 1927
http://www.intothegreyzone.com/node/496
I came to the same conclusion.
Talk. Talk. Talk. When Larry Summers is on board, wake me up.
Glass-steagall is the most effective way to regulate the banks, and there was some really smart people in the past to come up with this one. All other measures are BS, given the fact that this is still a free country, and if you want to burn YOUR own money in a flame, you still can. But don't burn MY money on my behalf.
by the way, I talked to a guy grown up in Kenya, and he told me that the name was Mbarack Obama. Somehow it was really convenient to omit the big M.
Isn't it interesting that in the story the CRA is never mentioned. It was the trade-off Dems wanted to pass the repeal and was, shall we say, what prompted BS mortgage lending in the first place. It took the foxes (and all the king's men) to come up with the products to allow banks to lend money to folks ordinarily denied these opportunities.
If GS is enacted, hardly any banker will leave but financial services will. Remember how the Euro-market was created? A different reg caused that one and helped London to become a major hub. Count all the banking accidents during the period of GS? Safe? We have plenty of reg and oversight in the country but fail to hold people accountable. Don't forget the banks' market share has shrunk significantly over the decades, and all the non-bank banks to numerous to count and other financial actors are major contributors to the repeated market failures we have experienced. All I am suggesting is that GS is not the solution but another band aid.
The insane money printing leprechauns are already out of the barn door.
ZH'ers, face the facts.
Put fork in it, the USA is done.
Please. The World's Greatest Deliberative Body would announce it was considering repealing the 21st amendment - thus making the 18th effective - if they thought it would shake a few Simoleons from the lobbyists. Of course, they *might* exempt themselves.....
To those who haven't read the repeal of Glass-Steagall (the Gramm-Leach-Bliley Financial Services Modernization Act of 1999 [together with Reagan's Depository Institutions Act of 1982]) -- and forget those comments of those who haven't -- don't realize it was part one of two parts which removed legal risk and allowed for super financial monopolies. Part two, and equally important, was the Commodity Futures Modernization Act of 2000 -- which allowed for superleveraging by those super financial monopolies.
Now, since this "largest financial overhaul since FDR's New Deal" -- so claims the newsy whores (and of course it isn't -- the largest financial overhaul were the previously mentioned GLBA of 1999 and the CFMA of 2000) H.R. 1473 has enough loopholes to pilot a fleet of Boeing dreamliners through, we can be fairly certain that Steny Hoyer is blowing smoke up his butt --- something he has done a considerable amount of in his thirty years in the House (to anyone familiar with his voting record!!!!).
Similar to his sister, who was (and may still be, for all I know) a director over at AIPAC.
Get the picture?
1) They also need to enforce the rules still on the books. The Reagan judges do not believe in enforcing the laws, despite their oath, or only when their friends benefit. Its pretty bad.
2) Do not forget the anti-trust laws. These have also been gutted. This contributed to to the calamity as they used to prevent the companies from getting to big. Even Hayek of The Road to Serfdom argued for anti-trust laws to prevent monopoly power over the economy. Geitner also got caught up in the idea of loosening controls, a decision I'm sure he regrets (Cuz he says so and looks real embarrassed when its brought up)
3) The anti-Brandeis\FDR lobby preached doom from early 1920 through this thread now. I'd suggest the poster criticizing Glass Steagel is mistaken about reality. The Glass Steagal rules worked pretty well for many, many years. No major disasters. Within ten years of their repeal, the problems they were designed to prevent occurred.
People who do not agree might also want to check what happened when the Keating 5 tried to block regulators and Reagan de-regulated the S&L industry (hint--it cost the US taxpayer quite a bit of money, which has never been repaid)
Its like removing the fence and the guards from the warehouse, then telling everyone they can all put the money in one big warehouse. And saying "It'll be safe. We're smarter now." It took awhile. But someone looted the warehouse. Now the people who repealed the rules are screaming its the ACORN folk, who got less than .01% of the loss.
4) Predict that GS will simply buy some Republicans or some stupid democrats and get an addition that if there is a "GS" sticker on any deal, GL no longer applies. Can you say "BIG bonus baby!"
Reenact the Glass Steagall Act= reenact the uptick rule= bring back the gold standard= delusional thinking. Can't put the genie back in the bottle. Sorry.
So we should be in a Depression within a few months. The damage has been done.
A 350 % debt to gdp. & Not sure How we get Williams hyper inflation out of that.
At this stage of decrepitude of the American 'republic', 'Glass-Steagall's recall cannot kick the butts required.
perhaps 'Steven Segall' should be recalled ??
Glass-Stegall is Obama's new moral imperative. His legacy will center on this issue, more than he can know right now.
Repealing G-L-B and reinstalling Glass Steagall, the ultimate example of closing the barn doors after the horse has galloped off.
Gramm is laughing his ass off at his reward employer...UBS. I wonder if he even has to show up there at all.
Just once I'd like someone to explain EXACTLY what the effect of Glass-Steagall is. What exactly is it that banks could not do before, but can now?
Even wikipedia just has some of mumbo-jumbo about "separating investment banking from commercial banking", and no specifics.
I'm entirely convinced that Glass -Steagall should be re-instated, but how does it actually work? Actually, here is a pretty good explanation:
http://www.investopedia.com/articles/03/071603.asp?viewed=1
It describes some of the specific restrictions:
1. banks cannot underwrite (i.e buy new issues and hold or resell) any bonds or other securities except government bonds.
2. banks cannot derive > 10% of revenue from securities trading
3. hence, in particular banks cannot use customer deposits to buy securities for their own account.
4. banks cannot also be securities brokerages for their customers, hence reducing risk that bank customers get fooled into thinking that securities are "as safe as the bank".
One matter I do not understand is how banks might not be able to buy (speculate in) securities themselves, but have they not always been able to LEND money to other people that will in turn speculate in securities?
I suppose there is a difference, though. When a bank is completely separated from the entity that borrows money to speculate, it is less likely that they will be sloppy with the loan criteria. Imagine if the brokers and the bankers were in the same company, and the brokers talked the bankers into letting them use the customer deposits to speculate (for a fee, of course). I think this is what occurred before the great depresson.
That looks like a good explanation to me. They are FDIC insured while using bank deposits and any other money they have to trade securities,derivitives, ect.. and if they fail or become too leveraged their deposits are insured by the FDIC which in turn is backed by the taxpayer. So they are using our money,(bank deposits) and our money (Treasury money), and if they fail they are backed by our money(Taxes via the FDIC). Is there a downside?
People that borrow money to speculate or trade with usually have to have some qualifications to recieve that loan. Collateral, future income, good credit rating, ect.. and are not backed by the FDIC. I'm simplifying it.
Either reestablish the G/S act,or abolish the deposit insurance. This way,whether a bank is risking people's deposit is no matter for the tax payers. And banx that fail,don't need rescue since they don't have insurance for that(and this way also,gold bugs will rejoice,lol)...
Is there an actual Bill in progress or are they all just waving their dicks around to see if anyone screams?