Executive Intelligence Review
Subscribe to EIR


Senate Banking Committee Asks Yellen About Glass-Steagall

July 14, 2017 (EIRNS)—Freshman senator John Kennedy (R-La.) yesterday asked Federal Reserve Chairman Janet Yellen whether she thought the 1999 repeal of the 1933 Glass-Steagall banking separation law contributed to the present financial crisis. Her answer demonstrated that, like the sponsors of Glass-Steagall repeal and the Dodd-Frank Act that has spurred further growth in the deadly financial bubble, Yellen’s concern is to protect the cancerously growing financial institutions, not people or the actual economy. She said that the "largest distress that was suffered" in the 2008 crisis was from investment banks including Lehman Brothers and Bear Stearns "that were products of Glass-Steagall," and that we were better off if investment banks were coupled with commercial banking institutions.

Kennedy followed up with a question on the currently-in-force Dodd-Frank law’s "Volcker rule." She said she supported it because its intention was to support "market making"—otherwise known as unbridled speculation.

Last month, Kennedy pursued a similar line of questioning with Treasury Secretary Steve Mnuchin. Afterwards, he granted an interview to The American Banker (June 7, 2017) in which he said that the Senate had to discuss Glass-Steagall, because,

"It seems clear to me that in America today we still have financial institutions ... that could substantially hurt the economy, maybe even tank it, if they were to get in trouble."

His main concern was the health of the remaining small consumer oriented banks. "I want to see us to get our community banks and credit unions out from under Dodd-Frank," he said.