Saturday, November 30, 2013

Glass-Steagall reinstatement fight in Belgium

Glass-Steagall is the indispensable first step to global economic recovery. It will immediately halt the onset of hyperinflation, remove government commitment from bailing out toxic debts, end too-big-to-fail banks, and force a separation of commercial banking functions from investment banking functions.
Legislation to restore Glass-Steagall, “The Return to Prudent Banking Act of 2011”, was introduced into the 112th Congress and garnered massive institutional support and 84 cosponsors in the House of Representatives.
On January 3rd, 2013 “The Return to Prudent Banking” Act was re-introduced by Rep. Marcy Kaptur (D-OH) in the 113th Congress as H.R. 129. And on May 16, 2013 a matching bill was introduced into the Senate by Sen. Tom Harkin (D-IA) as S. 985.

It has been clear to both advocates and opponents of Glass-Steagall, that, once the United States returned to this principle, Western Europe would be soon to follow. Indeed, the political drumbeat for what could be called a ``Global Glass-Steagall'' has been building up dramatically over the last two to three years, fed by the organizing of the international LaRouche political movement.
Nomi Prins, former Goldman Sachs trader and Demos research fellow, has penned a devastating expose of the massive loopholes written into the Volcker Rule for Truthdig. She began, ``The Volcker Rule in its current form ostensibly focuses on mitigating the `excessive' risk of proprietary trading at banks (which it doesn't do well).
Ironically the just-announced "Volcker Rule" of Dodd-Frank is causing strong problems and reactions from community banks and their national trade group, while its loopholes are made for the big banks on Wall Street to enjoy.
Who needs the Volcker Rule, argues Washington Post columnist Alan Sloan in his column on Thursday entitled "The Volcker Rule: A Triumph of Complexity over Common Sense."
According to a senior U.S. intelligence source, Fed Chairman Ben Bernanke worked out in advance with Wall Street that the FOMC meeting would begin the tapering of quantitative easing.
The leader of the Greek Parliament opposition, Alexis Tsipras declared, "Europe needs its own Glass-Steagall," yesterday, during the Madrid conference of the Party of the European Left, which includes many of Europe's former Communist and Euro-Communist parties.
Last month, Karel Vereycken, from Agora Erasmus, a movement and political forum associated with the works of American economist Lyndon LaRouche in the U.S. and Jacques Cheminade in France, discussed the perspectives of the banking reform now under consideration in Belgium with Belgian MP and former Minister Bruno Tobback, currently the chairman of the Flemish Socialist Party (Sp.a).
While the Belgian government (a six party coalition) is examining its banking reform, four MPs and Agora Erasmus, a movement and political forum associated with the works of American economist Lyndon LaRouche in the U.S.
Coming as no surprise at all, the European Parliament gave its official go-ahead for the bail-in "approach," in a decision Dec. 11. The policy will be implemented with an EU directive, entering into force on January 1, 2015, and the bail-in system is to take full effect on January 1, 2016. A review of measures is planned by no later than January 2018.
In an interview with Deutsche Welle, Prof. Bill Black slams the Volcker Rule and cites the urgent need for "thinking boldly" and restoring Glass-Steagall.
A PDF of this resolution can be found here.
The following resolution was passed unanimously Thursday night by the Detroit School Board:
Resolution of the Detroit Board of Education Condemning the Bankruptcy Ruling and Urging Swift Congressional Passage of Glass Steagall
In a video interview with Bloomberg News on Thursday, Sen. Elizabeth Warren declared that irrespective of the Dec. 10 enactment of the Volcker rule, "We still need Glass-Steagall."
A transcript of the Bloomberg interview follows:
How It Works
Since 1999, banks have been allowed to use commercial deposits and assets as fuel for securities trading on the derivatives market.
Because commercial and speculative assets are so heavily comingled, the government is forced to protect the assets of banks making risky bets through near perpetual bailouts and purchasing of toxic debt.
It was the derivatives bubble that blew up the system and bankrupted the US banks in the 2007-2008 crash.
1. Commercial Banking institutions have one year to divest themselves of all non-commercial banking units, with no cross management or ownership between commercial and non-commercial units.
2. Commercial Banks are barred from using more than 2% of its capital for the creation, sale, or distribution of securities (certain bank-qualified securities are exempted)
3. Prevents Commercial Banks from loaning their commercial deposits into such vehicals as would support the creation and circulation of securities.
4. No securities of low or potentially low value can be placed by a bank into its insured commercial bank units.
* Adds provision stating Glass-Steagall is the preeminant regulator of the banks, limiting banks from putting its depositors and shareholders at risk.
Glass-Steagall forces separation of commercial from investment banks, it ends Too Big To Fail, bars government bailouts, and will stop the onset of hyperinflation.