Wall Street Bankers Scurry
To Block Glass-Steagall
by Nancy Spannaus
Aug. 26—How far will Wall Street go, in its attempt to squelch the death sentence for their government-supported gambling, which would be imposed by the passage of a new Glass-Steagall Act? With the momentum behind the Glass-Steagall revival growing, in the face of increasing signs of a new financial blowout on the eve of the return of Congress, the evidence is that Wall Street, the outpost for Anglo-Dutch finance in the U.S., is in a panic mode, and mobilizing all the assets at its disposal to try to kill the bill.
The pattern is straightforward, and clearly coming from the top of the Anglo-Wall Street banking establishment:
On Aug. 7, JPMorgan Chase's chief executive Jamie Dimon, head of the most powerful criminal bank on the Street, took the occasion of an interview with Oklahoma's leading paper, the Daily Oklahoman, to oppose the re-institution of Glass-Steagall and endorse the "bail-in" alternative, Dodd-Frank.
On Aug. 9, the California Bankers Association issued a letter to a wide array of members of the California State Assembly, declaring its opposition to the Glass-Steagall Memorial (ACR 73) which had been introduced there Aug. 5, branding it a "Lyndon LaRouche measure"—in an almost laughable attempt to ignore the broad support in Congress (75 sponsors in the House, 9 in the Senate) and the financial community.
On Aug. 12, an unprecedented contingent of bank lobbyists, including advocates for JPMorgan Chase, Citibank, and Bank of America, descended on the National Conference of State Legislatures in Atlanta, to defeat a resolution calling on Congress to pass the Glass-Steagall bills now before Congress.
On Aug. 19, President Obama summoned his top financial advisors to the White House, to demand immediate action to complete the Dodd-Frank regulations, in a desperate attempt to head off the momentum for Glass-Steagall.
On Aug. 21, a letter by the Chief Operating Officer of the American Bankers Association, Michael J. Hunter, appeared in the Daily Oklahoman, attacking any revival of Glass-Steagall as "dangerous," and attempting to counter a pro-Glass-Steagall op-ed published Aug. 14 by EIR Economics editor Paul Gallagher (see boxes).
Sensing that Glass-Steagall means the end of their murderous looting, by calling the question on their worthless gambling debts, these bankers are going berserk. But they can only succeed if Americans fail to summon the courage to fight for a total victory—beginning with imposing Glass-Steagall, and proceeding immediately to the installation of a Hamiltonian credit system for launching huge projects for technological progress, starting with NAWAPA XXI.
An Impending Deadline
When Congress returns Sept. 9, it will, in all likelihood, face a dramatic new phase of the bankruptcy crisis of the financial system. Lyndon LaRouche, in his Aug. 23 webcast, projected that this Fall will see the outbreak of a debt blowout leading to the crash of the system. Then, he said, the question is not going to be who will end up on top, but who will lose. The top bankers know that their massive debts can never be paid, so what they will do is the so-called "bail-in," a wipeout of trillions of dollars of fake assets that will pull the livelihood out from under whole sections of the U.S. population.
Unless an entirely new system, based on Glass-Steagall and the credit system, is put in place, there will be a mass shutdown of incomes, bank accounts, and food—just as in the Cyprus and Detroit situations. The U.S. will be subjected to just what the Queen of England and her cohorts intend: a rapidly increasing death rate leading to depopulation.
LaRouche laid it out again Aug. 23:
"So the point is, if you're a patriot, your only option is to destroy this oligarchical system. So therefore, you have to shut it down. Now, the question is then, what's the shutdown? Well, there's only one option we have; it's called Glass-Steagall. And under Glass-Steagall, under the policy which I've specified, which is Glass-Steagall—but you have to have certain specifications as to how this is going to work. And the way I have it, we will simply put the whole thing through reorganization. It means that we will wipe out the people who are behind the bail-in and bail-out and so forth. They don't have any value. They've been going along with gambling, gambling, gambling, gambling, and never doing anything to secure that gambling. This money, their supposed assets that they keep rolling over—there's no value in them....
"With Glass-Steagall we do two things: First of all, we cancel all these debts that are fake. Most of the inflation that you're experiencing in the United States and Europe is a result of an inflated value of worthless money. There may be some small amount of all that debt that has some intrinsic value, or could be claimed to have intrinsic value. Most of it is going to have to be wiped out. Either it will be wiped out voluntarily, or by law, it will wipe itself out, because it can not continue to survive because the money is all fake. So that being taken into account, that is what we're faced with.
"Now, most people, unfortunately, including bankers generally, and a lot of accountants and general forecasters, really don't understand what this is all about. It's not that somebody is hiding it from them, it's that they don't want to believe the truth. So what we do, simply, is this: We would take and enact Glass-Steagall. What that means is we would go to a new system, it's the same system the nation was founded on. The first George Washington Administration had the same policy I'm talking about now. Which means that you give credit, you don't put out money and tell people to buy the money and then spend the money. What you do is, you give them credit.
"Now the way it would work—for example the way Alexander Hamilton approached it—what you would do first of all, is you would have a season, just to take a simplistic view of how this thing actually worked with him. You have a season. Now, a season will generally start with a year, which means that you're getting into the beginning of the year, which is the time you start to get into crops. So you have this period from Christmas on, from New Year's on, until the crops begin to be planted and harvested, and similar kinds of things done. And the farmer, in the meantime, is getting ready for the growth of the crops and whatever else is involved in this. Then at that point, harvest time comes. And at harvest time, now the farmer's product is now on the market, and people are buying that product. So then we go into another phase, when the farmer has now become enriched in a sense.
"So now we go to the next phase. How about the production, the physical production and so forth? And also building of canals and things of that sort, which were essential for the economy. So what we have is, we denote the value of transactions in those terms, as credit terms. And the credit of the farmer is then used to buy the goods of the machinist or the other trader.
"And it goes around in that circle, so that really you are never looking at money as such. You may use money as a way of denoting something. Paper money, as a way of denoting an obligation. Who's got it? What's the score? But the actual foundation of this is what are we producing and consuming. And what is the benefit of what we're consuming for us?
"So on that basis, what I would do—and probably will do if I ever get a chance to do this, right now; it's what we have to do right now—we have to put the whole thing through bankruptcy reorganization. And we do that simply by Glass-Steagall. The Glass-Steagall law, carried out in the same design that Franklin Roosevelt did it the first time around. And that's the first thing we do.
"Now, we have to go to increase the productivity of the labor force, which means we have to give not only more productive work, producing things that are needed. Transportation, all kinds of things. But we must also increase the actual physical value in terms of production. More and better crops; more and better manufactures; more and better services; more and more canals, railways, things of that sort. So this whole process is a cycling, a recycling of the process of productivity. And that's what we have to do."
What Wall Street Is Protecting
There are few honest Americans who don't realize that Wall Street, under the recent Presidential administrations, and especially since the repeal of Glass-Steagall in 1999, is the crime capital of the United States. "Money" is used to enrich a financial oligarchy, at the expense of the living standards, labor power, and productive potential of the real U.S. economy upon which human life and progress depend. The methods range from fraud to outright theft.
What people don't know is that a restored Glass-Steagall would outlaw the major looting practices now underway.
Take the case of JPMorgan Chase, which is now under investigation for wrongdoing in at least 10 different scams. So far, most of these cases are civil suits, and JPMorgan has walked away with fines of hundreds of millions of dollars—which they consider just the cost of "doing business."
One of the latest fines JPMorgan paid was to settle a lawsuit accusing it of mishandling the money of pension funds and other clients by investing it in notes from Lehman Brothers Holdings Inc., which went bankrupt. The Lehman notes had been bought on behalf of participants in JPMorgan's securities lending program, led by the Operating Engineers Pension Trust of Pasadena, Calif. JPMorgan's pouring of money into Lehman, which it knew to be hyper-overleveraged 35-40:1 in securities trading, would have been outlawed by Glass-Steagall, which did not permit commercial banks, which JPMorgan Chase claims to be, to support securities broker-dealers by these methods.
JPMorgan Case is also under investigation, once again, for mortgage securities fraud, according to an Aug. 18 article in the Wall Street Journal. Then there is its price racketeering in commodities, and its practice of electricity price gouging, for which it paid a $500 million fine recently. Both of the latter two practices would be banned by Glass-Steagall.
Life Without Wall Street
What lies behind Wall Street's hysteria to stop Glass-Steagall is the realization that it would represent a death sentence, not just for the bankers' crimes, but for their very existence. Wall Street's gambling excesses have been so enormous that it could not survive an honest bankruptcy reorganization, such as FDR put the banks through in the 1930s.
Unfortunately, the American and Europeans population largely suffer from the same disease of monetarism, and find it frightening to think of life without the dictatorship of the markets. What they have lost is the vision of the future, last provided by President Kennedy, and a conviction that progress is not only necessary for human survival, but also possible.
It is in this context that LaRouchePAC has taken up the mission of providing that vision—the nuclear/thermonuclear NAWAPA that is initially outlined in the Feature in this issue of EIR.
The first step to that future is to defeat Wall Street by ramming through Glass-Steagall. Wall Street's death is the pathway to a prosperous life again, not only for our nation, but for the world.