With Obama Opposed, Glass-Steagall
Heads to the Senate Floor
May 6, 2010 (EIRNS)This release was issued today by the Lyndon LaRouche Political Action Committee (LPAC).
Economist Lyndon LaRouche has posed the one way to exit this worsening financial/economic disaster: a global restoration of the Glass-Steagall principle to separate real investment from toxic speculation in banking; and formation of a fixed-exchange-rate credit system by nations for new infrastructural investments.
In the United States, legislation to restore the authority of the 1933 Glass-Steagall Actdisastrously repealed a decade agowill be put on the Senate floor for debate this week, in the form of a Cantwell-McCain amendment to the Restoring American Financial Stability Act of 2010 (the so-called "Dodd bill"). The Obama White House, the Federal Reserve, and Tim Geithner's Treasury have made clear they oppose this Glass-Steagall amendment by Senators Maria Cantwell and John McCain. But the Senators have stated their intention to put Glass-Steagall forward, and Dodd has had to accept the amendment for debate, according to The Hill. Two days ago Sen. Mark Warner, who opposes Glass-Steagall restoration, acknowledged that it likely had the votes to pass the Senate.
In Senate action today, the Dodd bill was amended, 95-3, by changes pushed by GOP Sen. Richard Shelby, with which Dodd came to agreement. The key change Shelby demanded and got, was "a ban on the use of Federal funds to bail out banks," as he put it, and strong restrictions on the Federal Reserve's "emergency lending" to banks on indiscriminate collateral, under the "unusual and exigent circumstances" rubric used in the bail-outs.
This defense against bail-outs won by Shelby is significant for its reflection of the political mass strike underway in the nation. But it would turn out to be no more effective than the "Maginot Line" defense was, without a Glass-Steagall separation of commercial banking from speculative investment banking, and separation of investment credit from debt-leveraged "crap" securitiesas Goldman Sachs executives derisively called what they were selling.
The agreement to the Shelby-Dodd amendment means this so-called "Wall Street reform bill" is likely to pass in coming weeks, and puts a focus on the amendments seeking to strengthen it. The key amendments, led by Glass-Steagall, are all being opposed by the Obama White House and Treasury. They must be rammed through the Congress by our mobilization of the mass strike ferment across the country.