Categories



TheLibertyMill




The Phaserl








AvatarProducts

Nightmare on Wall Street: Republicans & Democrats Agree on Reinstating Glass-Steagall Act

by Wolf Richter, Wolf Street:

I can already hear the sloshing sounds of money.

An amazing thing happened at the Republican Convention when some unexpected language showed up in the official 66-page Republican Platform 2016, a document that a delegate from Texas enthusiastically called, “the most conservative platform in modern history.”

And therein is this sentence:

We support reinstating the Glass-Steagall Act of 1933 which prohibits commercial banks from engaging in high-risk investment.

It’s followed by this bit of wisdom: “Sensible regulations can be compatible with a vibrant economy….” By extension, reinstating the Glass-Steagall Act would be that “sensible regulation.”

Upon hearing about this, Wall Street executives and just about everyone else at JPMorgan, Citigroup, Bank of America, Wells Fargo, Goldman Sachs, and a slew of others, plus central bankers in the US and abroad, especially those that cut their teeth at Goldman Sachs, plus Treasury officials and revolving-door beneficiaries, they all ran to their respective johns and vomited.

Reinstating the Glass-Steagall Act would mean separating federally insured deposit-taking banks from everything else and limiting their activities to classic banking. Once implemented, it would bring about a form of financial sanity and decades of financial stability among banks. Hedge funds like Goldman Sachs would presumably be allowed to collapse under their risks and go bankrupt without bailout, handing juicy losses to stockholders, bondholders, counterparties, and others, including possibly even executive pension plans.

This was a lesson learned during the Great Depression. Separating those risks from banks, and keeping banks smallish, worked for decades until a Republican Congress and President Clinton conspired to abolish the act. It took banks only eight years of gorging on risks and merging with hedge funds and cheating and running wild and thinking they were gods, before the financial system began to crack in 2007.

Nothing was learned from the Financial Crisis. Risks are now much bigger than ever before, and more concentrated, and banks are now officially too big to fail and too big to jail, and everyone knows it.

But if Republicans are for reinstating the Glass Steagall Act, why hasn’t it happened yet? They’ve run Congress for years, and not even as much as a distant rumble has come forth about reinstating Glass-Steagall.

Besides, they’re not the only ones.

Read More @ WolfStreet.com

Help us spread the ANTIDOTE to corporate propaganda.

Please follow SGT Report on Twitter & help share the message.

1 comment to Nightmare on Wall Street: Republicans & Democrats Agree on Reinstating Glass-Steagall Act

  • anon

    “Nightmare on Wall Street: Republicans & Democrats Agree on Reinstating Glass-Steagall Act”?

    Yeah, right. I’ll believe it when I see it. It’s all propaganda.

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>