Fight over Glass-Steagall
Again Comes to the Fore
May 18, 2012 (EIRNS)—The mobilization to reinstate FDR's Glass-Steagall law separating investment and commercial banks has taken off, in the wake of the JP Morgan losses, and deepening Eurozone financial crisis. One major focal point should be H.R. 1489, the bill submitted by Democratic Rep. Marcy Kaptur (Ohio) in 2011. Kaptur's bill has been stalled due to Administration pressure, but has just begun to gain new sponsors. They now number 59, with reports of new signers coming.
Gaining the most publicity in their promotion of Glass-Steagall have been former Clinton Labor Secretary Robert Reich, who has devoted his blog to this question, and Democratic Senate candidate Elizabeth Warren of Massachusetts. Warren has launched a petition drive which has already garnered more than 50,000 signatures. Both individuals are playing a very useful function by sharp attacks on the uselessness of the so-called Volcker rule in controlling speculation—at the precise time when Congress is being pressured by Wall Street to try to "fix" that non-existent rule.
One surefire indication of the growing fight was the May 18 posting on the "Politico" website of an attack on Glass-Steagall by an unidentified former Federal Reserve official, who wrote:
"Warren made an assertion so often repeated in recent years that it risks becoming conventional thinking, and it's dangerously wrong. To separate risk taking from ordinary consumer banking bears no resemblance to reality. The inconvenient truth is that 'plain vanilla' lending is far and away the riskiest activity any financial institution can engage in."
The anti-FDR crowd is active, and lying again.