PRESS RELEASE

Liam Halligan: There Is an Overwhelming, Pressing Need for Glass-Steagall

May 11, 2014 (EIRNS)—Liam Halligan published a strong article in favor of Glass-Steagall in the London Telegraph Saturday, under the headline "Only full separation will make our big banks safe." Halligan has frequently called for Glass-Steagall in the past, and reflects one current of thinking in British establishment circles.

Halligan’s latest article weighs in strongly on Glass-Steagall, using the occasion of a Barclays bank announcement that it is going to lay off some 14,000 employees in 2014, purportedly as part of moving away from speculative investment banking and back toward regular commercial banking—which Halligan says is "utter tosh" and just a publicity stunt.

"Despite the mood music around this announcement, Barclays will remain heavily involved in investment banking... [It] in no way negates the overwhelming pressing need to make a decisive split between high-risk investment banking activity, on the one hand, and the utility banks serving ordinary firms and households on the other... The only way to make our big banks safe, or as safe as they can be, is a full, line-in-the-sand separation of investment and commercial banking... This is the Glass-Steagall divide, implemented in the U.S. after the 1929 Wall Street crash. Glass-Steagall kept America safe from major, systemically damaging bank failures for almost 70 years... My 11-year-old daughter gets it. And the only reason the banking lobby doesn’t is because, for obvious financial reasons, it doesn’t want to."

Halligan elaborates that the Vickers and ring-fencing reforms will never work, and that "the lack of meaningful reforms, in fact, has led to behavior which, over the last five years, makes another ‘Lehman moment’ more likely." He takes note of the fact that there is "a string of extremely experienced ex-investment bankers who, having made their stash, then seek to brush up their memoirs by saying that ending Glass-Steagall was a mistake," mentioning Sandy Weill, John Reed, and others. There are "many extremely authoritative and knowledgeable advocates" in the U.K. too, including Mervyn King, Lord Lawson, Lord Myners and others. But they are all "either in retirement or towards the end of their careers," Halligan notes ruefully.