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Congressmen Begin To Move
For Glass-Steagall

Dec. 11, 2009 (EIRNS)—Five senior Democratic Congressmen, Rep. Maurice Hinchey of New York, John Conyers of Michigan, Peter DeFazio of Oregon, Jay Inslee of Washington, and John Tierney of Massachusetts, are introducing an amendment to restore Glass-Steagall, to House Financial Services Committee chairman "Bailout" Barney Frank's banking reform bill. The text of the amendment was obtained by EIR News Service Dec. 8, and the news of the FDR-era Glass-Steagall move has been welcomed by several blogs that are sick of the policies of the Obama White House and Bailout Barney.

The istockanalyst.com blog posts the news of the amendment introduced by Hinchey with the title, "Someone in Washington Has a Brain—Bring Back Glass-Steagall." Another blog, rebeltrader.com wrote that the sponsors "want to restore the Glass-Steagall Act of 1933, which prohibited commercial banks from underwriting stocks and bonds. The act was appealed in 1999 at the urging of, among others, Larry Summers, now President Barack Obama's chief economic adviser.... The Law's repeal ushered in an era marked by big banks getting even bigger." Rebeltrader also notes that three weeks ago, on Capitol Hill, Treasury Secretary Tim Geithner blasted the Glass-Steagall Act and those who claimed its repeal was significant in the cause of "the crisis." Other favorable coverage of Glass-Steagall appeared in the Washington Independent newspaper, and in the firedoglake.com blog.

Last month, Rep. John Conyers (D-Mich.) told the Detroit Free Press that he would be introducing legislation to restore and update the Glass-Steagall Act. In a press statement issued on Dec. 7, Hinchey stressed the importance of Glass-Steagall:

When Glass-Steagall was repealed, it allowed individual banks to serve as one-stop shopping for commercial lending and investment banking. It was a recipe for disaster because these banks were empowered to make large bets with depositors' money and money they didn't really have' When many of those bets, particularly in the housing sector, didn't pan out, the whole deck of cards came crumbling down and U.S. taxpayers had to come to the rescue.... The absence of the protections in the Glass-Steagall Act essentially turned these financial giants into quasi-government entities because they were only able to survive the recent collapse with government assistance.

While this is only an amendment at present, a member of Hinchey's staff said that the Congressman remains committed to the issue, regardless of the outcome of the process regarding HR 4173, Frank's bill.