PRESS RELEASE
ECB Fears Greece Could Implement Glass-Steagall
Feb. 17, 2015 (EIRNS)—The European Central Bank seems to fear that the new Greek government is preparing to implement Glass-Steagall reorganization of the Greek banks. Since Glass-Steagall is in the party programs of the Independent Greeks and Syriza, the fear is not an unreasonable one on the part of the financier oligarchy.
Since coming to power, Deputy Prime Minister Yannis Dragasakis has been reorganizing Greece’s largest systemic banks. The government holds the majority shares in these banks through the bank bailout fund set up under the bailout agreement. Up until now, it has not exercised any management rights that a majority share would entitle it to. Dragasakis is changing that. Through discussions with board members and other shareholders, he has orchestrated changes in the chairmen and CEOs of the four major banks. Although details are not available, the purpose is to deal with the non-performing loans and to get the banks lending to the real economy. According to Greek financial sources, his actions are in line with the government’s promise that the banks will be run for the benefit of the country, and especially the citizens, since the banks were bailed out at the expense of the citizens.
On the eve of a board meeting of the National Bank of Greece, the country’s largest private "systemic" bank, which is to elect a new chairman, the European Central Bank (ECB) issued a letter to Athens and the banks, through the Single Supervisory Mechanism (SSM) which oversees banks of the 19 euro area countries, warning that it must approve all changes in bank management.
The new chairperson at National Bank is expected to be former Economics Minister Louka Katseli. "The ECB is said to have certain objections toward Katseli," reported the daily Kathimerini.
A look at Katseli would easily explain why the ECB had "certain objections." She is a highly acclaimed economist and political figure. She was a leading member of the Pasok party but was thrown out of it, because she refused to support the Memorandum. In a paper she delivered at the 20th anniversary conference of the Center for Policy Dialogue in Bangladesh on Nov. 18, 2014, titled, "Recent Fiscal and Labor Market Adjustment Experience in Europe—Lessons for the Low Income Countries," she makes a scathing attack on the repeal of Glass-Steagall, saying,
"the repeal of the Glass-Steagall Act in 1999 encouraged financial institutions to engage freely in investment and speculative activities alongside with commercial ones and incentivized them to minimize risks via securitization of loans and Credit Default Swaps, etc. They proceeded to set up unregistered and unregulated offshore hedge funds, promote derivative trading and develop complicated financial products and instruments so as to bypass transparency and/or capitalization requirements imposed by regulating authorities. They started speculating in capital markets and manipulating currency markets for which they face today prosecution and severe penalties. Congress’s subsequent decision to relax the Commodities Futures Trading Commission’s (CFTC) mandate to regulate commodity futures and option markets, left many market participants unprotected from price manipulation, abusive sales or practices and fraud. In 1999, the European Commission passed the Financial Service Action Plan, [which] relaxed the regulatory framework of banking institutions...
"Policymaking therefore, especially in times of crises, is shaped by the interests of a global financial system which, in the absence of regulation, appropriate incentives or effective oversight, caters to its narrow financial interests as opposed to the national interest: This is the second lesson to be drawn from the Eurozone crisis. "
