Regulators Recommend Glass-Steagall
to the House; British MP Tells
Chancellor, 'Glass-Steagall or Crash'
June 26, 2013 (EIRNS)This release was issued today by the Lyndon LaRouche Political Action Committee.
U.S. bank regulators told a key House committee today, that restoring the Glass-Steagall Act would solve the "too-big-to-fail banks" problem, while a senior British MP demanded of the British Chancellor that Glass-Steagall be enacted in Britain immediately to stop a bank debt meltdown.
There was a dramatic turning point in the House of Representatives Financial Services Committee hearing June 26 on "The Federal Reserve and Too-Big-To-Fail Banks." Rep. Michael Capuano (D-Mass.) asked all the witnesses, well-known and respected bank regulators, "If you could restore the Glass-Steagall Act now as the solution, would you do it, if you had the power?" Capuano is a co-sponsor of the House bill to do just that, H.R. 129, the Return to Prudent Banking Act, which now has 67 House sponsors and a Senate companion bill, S. 985.
Federal Deposit Insurance Commission (FDIC) vice-chairman Thomas Hoenig answered, "Yes I would. That's what I am proposing you [Congress] do." Former FDIC Chairman Sheila Bair answered the same question, "Yes, absolutely." Dallas Federal Reserve president Richard Fisher said, "I think what we have proposed is similar." Only Richmond Federal Reserve president Jeffrey Lacker implied a negative answer, saying that the Dodd-Frank Act would identify the financial activities that need to be separated from commercial banking.
Following this purposeful question and answer, heard by some 25 members of the House Committee, the hearing turned much more serious in discussions of the actual prospect of major financial failures in the near future, both in the Committee room and in the halls outside. EIR representatives briefed a number of Members on the ongoing slow-motion debt collapse on global bond markets since early May, and the urgent need to end Federal Reserve "quantitative easing" money-printing policy by re-enacting Glass-Steagall. A lobbyist for a national consumer organization pressed Congressmen to sign on as sponsors of H.R. 129.
Toward the close of the hearing, vice-chairman Hoenig injected the real situation into what had been fanciful discussion of big bank failures. "Title II of Dodd-Frank addresses an idiosyncratic event," Hoenig said,
"just a single big financial institution gets in trouble. It's not likely to happen. If you have a systematic meltdown, as we had last time ... the Congress will be asked for another TARP.... Restructure the system now, ahead of time."
Only hours before, in the British House of Commons, the longest-serving "Father of the House," Peter Tapsell, had told Chancellor George Osborne to enact Glass-Steagall legislation in Britain, or face an immediate and drastic bank crash.