Der Spiegel Editor-in-Chief
Calls for Banking Separation
July 30, 2012 (EIRNS)—This release was issued today by the Lyndon LaRouche Political Action Committee.
In yet another case of the Wendehals [wryneck "about-face] phenomenon, this week's print edition of Spiegel, one of the biggest news-magazines in Europe, carries an editorial by Editor-in-Chief Georg Mascolo titled "Separate the Banks." He reports on Sanford Weill's conversion and says that Glass-Steagall should never have been repealed. So far, he claims, there is not yet enough support for its revival, even if a "smart" German DAX CEO like Nikolaus von Bomhard (Munich Re) also wants to eliminate "the system's construction error."
To those who object (including in the economics section of Spiegel), he says Deutsche Bank will have to find itself another business model, but the pros clearly are more than the cons. The famous argument that Lehman Brothers was purely an investment bank and would have had to be saved regardless of Glass-Steagall, is true—but only in the present system. If you had a strict separation of banks, it is highly probable that Lehman Brothers' collapse would not have affected the whole financial system. Mascolo calls for a swift implementation of Glass-Steagall and says it could be quick and it must be quick [emphasis added].
"The Glass-Steagall Act became possible because a U.S. Senate commission had exposed the stupid, risky and sometimes criminal behavior of banks before the Great Depression. The outrage over it cleared the way for the law. Sometimes history does repeat itself. Glass-Steagall served the world well for decades; it would have been better to have never repealed the law. Now it is time to correct this mistake."
Spiegel also has a feature on the Libor cartel, including the investigations of Deutsche Bank.