PRESS RELEASE
Pro-Glass-Steagall Counterattack
April 27, 2017 (EIRNS)—It is notable that there is not only a spate of hysterical articles attacking proposals to reinstate the 1933 Glass-Steagall banking separation law, but there is also an increasing number of articles demanding Glass-Steagall.
In the Daily Reckoning yesterday, author Craig Wilson does an effective job of summarizing the case. His headline takes aim at a recent article by William Cohan, in the New York Times/Dealbook publication, which is a diatribe against the Trump Administration’s defense of Glass Steagall. His title is "Ignoring Glass-Steagall, A Policy for Disaster."
He starts
"Ignoring the risks and denying what actually caused the global financial crisis will only hurt policy discussions aimed at stabilizing the financial system."
Wilson goes on to summarize Nomi Prins’s arguments in her book All The President's Bankers. What Prins points out, is that former Citigroup chairman Sandy Weill's taking down of Glass-Steagall in 1999 led to, by 2008, Citibank’s need for a $32.1 billion bailout. (So much for the argument that the taking down of Glass-Steagall had nothing to do with the crisis.) On top of that, Citibank was caught in a totally illegal scheme to hide toxic assets. Williams points out that the total of the taxpayer bailout by 2008 led to over $2.5 trillion in bailout for the too-big-to-fail banks. In what seems an unbelievable figure, there was pledged to the bailout $16 trillion! Hard to believe, but this statistic was gleaned from the one-time audit of the Federal Reserve.
Wilson also documents, again from the Federal Reserve Office of Financial Research, that the six largest banks are at least 35% bigger and more bankrupt now, than they were in 2008!
The article ends with a quote from David Stockman, former Budget Director under Ronald Reagan:
"Severing the big banks’ pipeline to the Federal bailout system and putting Wall Street back on a free market based level playing field is the right thing to do. Todays multi-trillion banks are simply not free enterprise institutions entitled to be let alone. They are wards of the state dependent upon its subsidies, safety nets, regulatory protections and legal privileges. Consequently, they have gotten far larger, riskier and dangerous to society than could ever happen in an honest, disciplined market."
