by Pam Martens and Russ Martens, Wall Street On Parade:
Last Wednesday Janet Yellen, the Chair of the Federal Reserve (the central bank of the United States) regurgitated the notoriously fake information that has been spewing from columnists at the New York Times since 2012 on the causes of the epic Wall Street financial crash of 2007 to 2010.
Yellen was taking questions during her press conference on the Fed’s announcement of a rate hike. John Heltman, a reporter for American Banker, posed the following question to Yellen:
Heltman: “The administration recently reiterated its support for reinstatement of Glass-Steagall. Treasury Secretary Mnuchin has called for a 21st Century Glass-Steagall. Keeping in mind that there’s no specifics on this proposal, is the fundamental idea of separating commercial banking from investment banking a fruitful line of inquiry. Is this the right path to be pursuing?”
Yellen answered as follows
Yellen: “So, I’ve not seen any concrete proposals along this line. I don’t really know what a 21st Century Glass-Steagall would look like. I think my reading on the financial crisis is that wasn’t the major source of the financial crisis, in fact many of the problems emanated from firms that were investment banking units. To me, an important reform in the aftermath of the crisis was to make sure that investment banking activities that were a core part of the shadow banking system where leverage had built, that those were appropriately capitalized, had appropriate liquidity and their management was strengthened and that’s what we have tried to do. But obviously we would look at any proposals that are put forward. I’m not aware of anything concrete to react to.”
Notice what Yellen doesn’t say. She doesn’t say that an official research report that has investigated the cause of the Wall Street crash finds no evidence that it was related to the repeal of Glass-Steagall. She doesn’t say that the books written by the regulatory insiders of that period found that repealing Glass-Steagall had nothing to do with the crash. All that she says is this: “my reading on the financial crisis is that wasn’t the major source of the financial crisis, in fact many of the problems emanated from firms that were investment banking units.”
Yellen’s “reading” has clearly been coming from New York Times columnists who have demonstrated an inexplicable fealty to pumping out notoriously fake facts about the repeal of the Glass-Steagall Act while the publisher, managing editor and public editor of the New York Times have refused to correct those fake facts.
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