PRESS RELEASE
Wall Street Struggles To Keep Glass-Steagall Bottled Up
April 19, 2017 (EIRNS)—Since the U.S. Senate "21st-Century Glass-Steagall Act," S. 881, was introduced ten days ago, an explosion of major media "analyses" and statements have been published, claiming that Glass-Steagall can’t be restored, and/or would do great harm if it were. The outburst by dozens in financial press of America and Europe demonstrates fear that Glass-Steagall re-enactment may be coming closer.
Today the assault features an editorial in the Washington Post, which dominates media in the U.S. capital. It claims that Trump team support for the Glass-Steagall principle is "vague"; that splitting up Wall Street banks would take "tremendous effort;" and that the elimination of Glass-Steagall during the 1990s was unrelated to the speculative bubbles which caused the 2008 crash. Since after Glass-Steagall the Wall Street banks became U.S.-dominating megabanks for the first time, derivatives markets grew by 10 times in 10 years, and a sixty-year period without bank panics was replaced in just a decade by a global bank meltdown, this is similar to preaching that snow is black.
But since Trump’s economic advisor Gary Cohn told the Senate Banking Committee the President favors some form of Glass-Steagall restoration, all the financial press are preaching just that.
Clearly the Trump Administration’s being held to his campaign promise on Glass-Steagall, is crucial. David Hawkings, senior editor of the Capitol Hill publication Roll Call, said on Washington, D.C., radio this morning that Glass-Steagall can become one of the top legislative items in Congress overnight, if Trump officials make their support for it clear and public. On the morning "Federal Drive" show of Federal News Radio, Hawking said the claim of Administration support by Senators Warren and McCain is probably true, but the support must become public.
Treasury Secretary Steven Mnuchin, in an interview with CNBC-TV today, again said that he and President Trump supported "a 21st-Century version of Glass-Steagall" rather than a renewal of the 1933 law; he signalled that one such "version" was a bank separation or "ring-fencing of securities units away from commercial bank units," as proposed in this session by Federal Deposit Insurance Corp. vice-chairman Thomas Hoenig.
But a full Glass-Steagall separation is necessary to prevent massive new bailouts of securities firms and commercial banks in a new debt crisis which is threatening to blow out the U.S. economy again. And it is vital to recreate a lending-bank sector to participate in national credit for a recovery of productive employment and productivity.
