Restore Glass-Steagall

[UnrepentantLiberal]

[annabanana]

1. Yep!... Simple and elegant. THAT is why they thrash so furiously

to muddy the waters.

[elleng]

2. Absolutely

the only way to restore reason to the markets. Banks may NOT gamble/play with our money.

[Recursion]

4. Banks absolutely may gamble and play with our money

Under Glass-Steagall, they couldn't gamble with *their own* money.

[Recursion]

3. It wasn't those banks that broke things

The retail banks that opened proprietary desks aren't the ones that blew things up. That was the institutions that were already investment banks. All the repeal of Glass-Steagall did was allow them to take retail accounts, which none of them did anyways.

[4th law of robotics]

5. I would say banks can do whatever they want

HOWEVER: if they want to be FDIC insured then they must be only the one kind of bank.

Seems fair. No one is forced to do anything, but if they want the consumer confidence that comes with the backing of the Treasury then they must follow the rules of the treasury.

[ohgeewhiz]

8. Makes perfect sense to me!

And banks that don't comply will be out of business in six months.

Problem solved.

[Wondering Soul]

6. I dont understand why it seems that the Ron Paul crowd is against this one

After all, they are against the restoration of it, or a version of it, correct?

Along with their anti-bank, anti-bailout, anti-fed positions, this seems to fit right in.

Have I been missing something in that regard?

With that said, I'm all for it. It seems the logical step in dealing with that institution.

[ohgeewhiz]

9. You just pointed out one more reason Ron Paul

is a libertarian idiot.

And his followers don't know how to think other than being anti-war and pro drugs.

[Wondering Soul]

11. lol

Was just mostly a question... though, maybe you just gave me the answer.

Im sure that if that is the case, then even though it may apply to most, that it does not apply to all of them.

That is my fault as well, though, for painting 'Paul's crowd' with a broad brush.

[Scootaloo]

40. The Ron Paul crowd are fascists

Of course, like the hipster dumbfucks they are, they'll tell you they like the "classic" Fascism, before that Austrian Skrillex-looking dude made it mainstream.

[woo me with science]

7. Zero evidence lately that corporate Democrats are interested in doing this.

Last edited Mon Jul 9, 2012, 02:41 PM - Edit history (3)

We have a corporate money problem, and it is not just with Republicans anymore. You cannot fix a problem if you refuse to acknowledge it.

"...signed Friday by President Barack Obama..."
http://www.democraticunderground.com/1002921492

Corporate profits at a record high, remember?

Occupy.

[UnrepentantLiberal]

13. Makes you sick,

doesn't it?

Fuck Third Way.

[Canuckistanian]

30. Indeed. n/t

[Huey P. Long]

10. The Dems say 'no way'! Corporate stooges for self enrichment they all are-eom

[Egalitarian Thug]

12. Are you kidding? It took them almost a century to get us back here. n/t

[L0oniX]

14. ...and transfer all your money to a credit union.

[Remember]

15. never will be

too much money in Congress on both sides taking the banks money. FDR fixed the banks and we know who let out pandora's box!

[AnotherMcIntosh]

16. Only when a number the super-rich see that this is in their best interest, it is not going to happen

[boston bean]

17. That's a keeper. nt..

[Rain Mcloud]

18. REC.

[brooklynite]

19. No - DON'T "restore Glass-Steagall"...

...because nobody in the ordinary electorate knows what Glass-Steagall means. And, referring to legislation by the names of the sponsors is "inside baseball" terminology that makes the regular voter's eye's glaze over (do you remember Al Gore challenging George W Bush as to whether he would support "Dingell-Norwood" in the 2000 Presidential Debates? Do you have a clue as to what that Bill was about? Neither do I).

Instead, take the elements of Glass-Stegall and write the "Bank Restructuring Act" or the "Bank Depositor Protection Act" or any other name that will express a simple concept to the public.

[UnrepentantLiberal]

21. That's a very good point...

Except they'd put so many loopholes in the new act it would be worthless.

[dreamnightwind]

37. Glass-Steagall is actually widely known

so I disagree with your objection to the point of the OP. Restoring Glass-Steagall is necessary, and many of the average Joe Sixpacks know that. Since 2008, many people have learned bits and pieces of how we got into this mess, and the repeal of Glass-Steagall is one of the more well-known factors.

[davidpdx]

42. I agree that it should be restored

But I disagree with you that is widely known. Unless you are someone with a business background or something very related to that it is not something that is common knowledge. Even I have to admit with an MBA I didn't know what it was until I recently started studying for my doctoral degree. That combined with watching Too Big to Fail gave me a quick education on that matter.

[Scootaloo]

41. The formal name for it is the Banking Act of 1933

If you just want to do semantic rejiggering, there you go.

[MannyGoldstein]

43. Call it "Making Banks Safe Again Act" or similar?

That would be good.

[bvar22]

51. Call it...

"Support the Troops and Hard Working Americans Act"

As the "Patriot Act" proved,
the name on the bill doesn't have to have ANYTHING to do with the content.
Let the Republicans try to block the"Support the Troops and Hard Working Americans Act"


Along the same line,
the Affordable Care Act
should have been named the "Keep Big Government's Hands Off Your Medicare
and Support the Troops Act".

[UnrepentantLiberal]

52. Call it the support babbies, apple pie and grandma act.

[MannyGoldstein]

56. Yeah, I guess this stuff has gotten out of hand

Perhaps all Democratic bills can follow the following naming convention:

"The responsible adult bill to [fill in here] that isn't quite as bad as what the Republicans want"

[chknltl]

55. Banking Reform Act, or BRA: Supporting our needs!

With a smile of course.

[Fresh_Start]

20. Regulate investment banks, regulate derivatives, tax short duration financial transactions

heavily to dissuade speculation and incent investment

[Mnemosyne]

22. K&R

[bvar22]

23. I'll line up here,

but not just restore it.
It needs to be updated to deal with the new "devices" the banks have invented.

The "Historic Reforms" were embarrassingly weak.

[UnrepentantLiberal]

24. Would that everything that should be done

would be done.

[banned from Kos]

25. Not even a serious topic. They would have put it in Dodd-Frank

but the Volcker Rule is stronger which is why banks are trying to weaken it.

There is ZERO interest in restoring G-S.

[Selatius]

38. Volcker Rule is stronger as far as legal definitions go, but it's weaker compared to ...

the structural, institutional firewalls that were erected under Glass-Steagall in the wake of the crash of '29 and the Great Depression. Glass-Steagall effectively isolated commercial banking activities from investment activities to avoid conflicts of interest and "betting against" the customer that was a problem in the 1920s.

The legal definitions of what is and isn't permissible under the Volcker Rule are fine for the time being, although Volcker himself wished that the bill was simplified as far as definitions go from what it currently is. (He favored a simple four page bill outlining the Rule and the power for regulators to go after bankers if they found ways to get around the legal definitions outlined), but unlike Glass-Steagall, there is no structural requirement to split banking and investment activities from each other. The only consistent criticism of the Volcker Rule is that it becomes difficult to define what is and isn't proprietary trading from "permitted banking activities" at the margins. It is this gray area that can give rise to further abuses, thus why Volcker himself wished for a simplified set of definitions and broader regulatory powers in the event that someone is technically meeting the Rule but is also breaking the spirit of the Rule itself.

With the repeal of Glass-Steagall in 1999 under the Financial Services Modernization Act, it would be impractical to go back to that law given the structural changes that have happened in the 13 years since then. However, I'm convinced a solid compromise could simply be that banking and investment activities within a banking company should be split into separate divisions more so than currently is. Further, the commercial banking division should be required to maintain independent capitalization and ownership without actually requiring the bank to formally spin off the division into a true separate company. In this manner, the commercial banking division's activities are less subject to manipulation from the investment side of things for the simple fact that this division has now a strong internal incentive to prevent anybody on the investment side from betting against instruments sold by that division and to ensure that the instruments sold are solid and have a low risk of default or some other credit event.

[thesquanderer]

45. How is that possible?

You say, "the commercial banking division should be required to maintain independent capitalization and ownership without actually requiring the bank to formally spin off the division into a true separate company."

How can it have independent ownership, but still be part of the same company? Whoever owns the company owns all of its divisions.

If the speculative side of things is not a completely separate company, then when that side loses billions, as long as it is part of the same legal entity, the "safe" side is on the hook. That's what creates the "too big too fail" scenario that requires government bailouts in the first place.

I don't see any reason why 13 years of creating merged businesses can't be un-done through the creation of spin-off companies. Once you have created the independent division that you say should be created anyway, why can't it be sold?

[Selatius]

57. Easy, require it be a joint-venture or a partnership between said entity and the parent company.

In this manner, you're not going for the hardline stance under Glass-Steagall and requiring that the bank truly spin-off its banking activities from its investment activities, but at the same time, you're still establishing a firewall between the two in order to avoid conflicts of interest. Even if the parent or partner company made risky speculative bets and lost big in its investment wing, the banking wing would have leverage in as much as it can easily claim under joint-venture or partnership regulations that it isn't responsible for any liabilities arising from its partner company's failures or willful incompetence.

For example, if I wanted to build cars in China, I would likely form a joint-venture with a Chinese firm and split the profits in such a firm. There would be the partner firm, my firm, and the firm that is the joint-venture between the two of us. If the partner firm takes on large liabilities, such as massive investments in new infrastructure or research and development, the joint-venture itself wouldn't be on the hook if the partner firm has trouble making its bills. The only thing that would become a problem is if the partner firm goes into bankruptcy or out of business entirely, in which case the joint-venture would have to be dissolved seeing as the other half of the venture no longer exists. Of course, that's a worst case scenario, but this isn't 2008/2009 anymore.

Ideally, I'm on your page. Just put back Glass-Steagall; I have no problem with this route; it's the simplest one, but given the level of corporate money influencing the Senate agenda and elections in general, I think it would be a very difficult long-shot at best to get it reinstated in full, hence the compromise solution. The hurdles in the Senate are also why I favored the Public Option with respect to health care reform, as opposed to a far simpler and more cost-effective Medicare For All bill. There's too much money in opposition to the common sense, easier solution. So, we have to do things in a roundabout way. Such is the nature of a corporatized government.

[banned from Kos]

47. Banks made investments and hedged before 1999

the Volcker Rule limits such to about 3% of capital.

That is a firewall.

This is another topic that will mystify DUers because it will never gain traction in DC.

[Selatius]

58. It's not satisfactory, in my opinion, because of that douche Scott Brown of Massachusetts.

He inserted a loophole in conference to allow banks to continue to invest in hedge funds and private equity firms, and both also made some risky bets prior to the 2008/2009 crash. He was only able to do this because his vote was the last one needed to pass it in the Senate. The other loophole that bothered me was that proprietary trading in Fannie Mae and Freddie Mac were also exempt from the Volcker Rule in conference. Neither of these really makes me satisfied, and the latter creates a moral hazard simply because they're government-backed, which is just another encouragement to take on a little more risk than is necessary because they can always scream to Uncle Sam if crap hits the fan. I would've been far happier if somebody else besides Fannie and Freddie were exempt.

[FailureToCommunicate]

26. Oldie but goodie!

Yup, bring it back.

[tomp]

27. duh! nt

[slipslidingaway]

28. Feingold voted against Dodd-Frank because it did not go far enough. n/t

[DrewFlorida]

29. Great post!

Great post, thank you for posting it.

I will use this.

[ornotna]

31. I wish they would.

[DianaForRussFeingold]

32. Yes!

I agree! Reinstate "The Glass Steagall Banking Act of 1933!"

"Bill Moyers talks with former Senator Byron Dorgan about making sure big banks play by rules that protect consumers from financial calamity, and how those big banks use power and influence to avoid responsibility while maximizing profits." Jan 27, 2012":

[aquart]

33. I wept and howled when the idiots dumped it. So yes.

[Dustlawyer]

34. We will have momentum on our side as this scandal grows!

CAMPAIGN FINANCE REFORM!

[suffragette]

35. K&R

[limpyhobbler]

36. Yes, we should but this is a fantasy with corporate Democrats and Republicans in charge.

GOP is all corporate.

Dems are mostly corporate.

Can't get this done.

[sulphurdunn]

39. All that's happened since

the latest crash is that the banksters of the universe have doubled down on what brought it to pass and have profited handsomely doing so. Unless the current political class is replaced nothing will change.

[UnrepentantLiberal]

44. That's sadly probably true.

Maybe Obama has a surprise in store for his second term.

[agent46]

48. I'll be surprised

if there are any surprises in Obama's second term.

[UnrepentantLiberal]

50. O ye of little faith

[bvar22]

54. Oh Me of Little Faith.

The Past IS Prologue.
Track records before "Hope".

[BumRushDaShow]

46. Repeal Graham-Bliley-Leach = Restored Glass-Steagall. n/t

[nichomachus]

49. Restore the guillotine

That will end bank fraud a lot quicker

[HooptieWagon]

53. +1000

[Tuesday Afternoon]

60. nice catch and welcome to DU

[UnrepentantLiberal]

62. Ya like that, do ya, Tuesday

[UnrepentantLiberal]

61. Did the LaRouche nuts create that poster

or did they just put it on their website? I got it from an occupy website.

Is see this is your first post. Yes, very curious.

[Tuesday Afternoon]

63. wow.

[UnrepentantLiberal]

64. Wow what?