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Italy: Glass-Steagall Fight
Breaks Into the Major Media

May 18, 2010 (EIRNS)—Corriere della Sera, Italy's largest daily newspaper, published an article by economic editor Massimo Mucchetti on Monday, May 17, endorsing the Cantwell-McCain amendment now before the U.S. Senate, which would re-establish the Glass-Steagall separation of commercial and investment banking, and calling for its emulation in Europe.

Under the headline "Banks: The Example of the U.S. Senate; A Bipartisan Proposal to Reform the Financial System," Mucchetti writes:

They insist. Arizona Senator John McCain and Senator Maria Cantwell of the state of Washington, have formalized their project, announced last December, to reintroduce the Glass-Steagall Act in an amendment to the reform of the financial sector promoted by the White House. McCain, a former military officer, is 74 years old and is a Republican. Cantwell, a 52 year old environmentalist, is a Democrat. In their view, commercial banking must be again separated from investment banking, like the 1933 legislation (repealed in 1999) prescribed. Their amendment is bipartisan and the reform bill sponsor, Democratic Senator Chris Dodd, is supposed to include it into the discussion. It shall be seen, then, where President Obama, who today is against it, and the Senate, will stand.

McCain says: 'If big Wall Street institutions want to take part in risky transactions—fine. But we should not allow them to do so with federally insured deposits.' Cantwell adds: 'So much U.S. taxpayer-backed money is going into speculation in dark markets that it has diverted lending capital from our community banks and small businesses that depend on loans to expand and create jobs.'

These are clear and simple concepts. Professionals in red suspenders, involved in specialists' logic of stock markets and concerned only in protecting their gains, consider such positions to be not professional. But it is not true....

The author then mistakenly identifies Paul Volcker as a supporter of a Glass-Steagall reform, and adds:

In Italy, instead, the reform of financial regulations seems to be hostage to the committee of central bankers who meet in Basel. And yet, we have a bill that in 1993 tore down the firewalls between the two kinds of banking activities, which had been erected by the 1936 Banking Act, exactly like the Gramm-Leach-Biley Act did in America. But the Italian Parliament expresses no opinion on the subject.... Not one meeting, among the many useless which are held, re-examines choices made in the nineties.

Mucchetti's article was picked up by the daily Il Giornale, whose editors, however, expressed pessimism about the outcome of the battle in the U.S. Senate. "Obama is not strong enough to challenge the banking establishment," they write, and compare Obama to someone who, in front of people driving a car at a speed of 300 kmh, with gasoline bottles in the trunk, tells them to slow down to 270. "That is already something. But if you crash at 270, you die as well. And the bottles explode."