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LaRouche PAC Releases Video
on Stopping Wall Street's Crimes:

Wall Street's Permanent Bank Holiday'

Aug. 1, 2013 (EIRNS)—In a 12-minute video released today, entitled "Glass-Steagall: Wall Street's Permanent Bank Holiday," the Lyndon LaRouche Political Action Committee gets specific, and details six steps for shutting down Wall Street, a criminal enterprise which is killing American citizens now, and, if not stopped by the implementation of Glass-Steagall, will kill millions more.

With three bills to restore Glass-Steagall before the Congress, HR 129 with 75 sponsors in the House, and S 985 and S 1282 in the Senate, the movement to re-establish the FDR law is growing. Now is the time, LaRouche PAC asserts, to outline precisely how a re-enacted Glass-Steagall law will be enforced, step by step. Through carrying out these accounting rules, mandated by Glass-Steagall, the U.S. government will clear the Wall Street garbage out of the system, and allow us to get back to real banking, but it will require producing credit, to actually get growth in the physical economy.

The full video, available at http://archive.larouchepac.com/node/27570, is must viewing.

Here are the six detailed steps, drafted by EIR economist Paul Gallagher, which form the preliminary course of action which must be taken:

First: Prosecute Wall Street and Eurozone banks' crimes of looting the public:

  • The fraudulent sales of interest-rate swap derivatives to cities, counties, and states, must be prosecuted as securities fraud against unsophisticated investors, namely, the public agency officials who were induced to buy the swaps;

  • Prosecute the looting through commodity and service price hyperinflation. For example, the JPMorgan scheme in California, which involved selling California power operators electricity at $999/MWe when the going price was $12/MWe.

Second: End the bank holding company status of Goldman Sachs and Morgan Stanley:

  • The derivatives, MBS, and other instruments come off their commercial banking units and must be taken on the books of their investment banks and other securities divisions. This means there is no possibility of bail-out or bail-in for these securities.

Third: Enforce the legislative section that bans banks or holding companies from putting non-bank-qualified securities — including derivatives and MBS — on their insured commercial banks' books.

  • This prohibits the U.S. government from using Federal credit from the Fed or FDIC to lend against or buy these securities. Again, this means no bail-out or bail-in for these securities. It also means the Federal Reserve will not be allowed to hold its current $1.3 trillion in MBS. There will be a put-back to the Wall Street banks who sold them to the Fed at the price the Fed paid for them. The obvious question is: Do those banks have $1 trillion or more to buy back their trash?

Fourth: Enforce the legislative section prohibiting commercial banks/bank holding companies from owning commodities, commodities broker-dealers, like MFGlobal, or commodities production or transportation infrastructure.

  • This means JPMorgan Chase has to sell JPMorgan Ventures Energy Co. and its various other commodities-trading divisions; Barclays, Goldman Sachs, Morgan Stanley, Citigroup, State Street Bank, and other big banks will all have to do the same. Without the liquidity from the commercial banks, it is highly unlikely that these divisions will survive.

Fifth: Enforce the closure of branches of banks whose parent banks or holding companies are outside U.S. banking law and thus have investment practices that can't be limited by the U.S. Glass-Steagall law.

  • With this step, the Federal Reserve must close all liquidity loans to U.S. branches of European banks, and must demand put-back of MBS and U.S. Treasury securities it has bought from these European banks during QE1-4.

  • Further, nearly all U.S. operations of the large European banks have to be shut down or immediately reorganized as completely separate companies.

Sixth: Break up the largest U.S.-based bank holding companies.

  • Under the law Citigroup will have to break off all 9 divisions (including hedge funds, private equity funds, etc.) of its Securities and Banking Group; its Institutional Portfolios Division; and its Brokerage and Asset Management Division.

  • Wells Fargo will have to divest from Wells Capital Management Division; Wells Fargo Securities investment bank; Wells Fargo Advisors; and Wells Capital Management.

  • Bank of America will have to divest from Merrill Lynch; Countrywide Financial; Bank of America Equities; and its investments in various hedge funds.

  • JPMorgan Chase will have to divest JPM Investment Banking Division; JPM Hedge Fund Services; JPM Partners; Worldwide Securities Services; and Bear Stearns Investment Bank.

  • Morgan Stanley-Smith Barney will have to give up the bank holding company status it was granted by the Treasury and Federal Reserve when it took on the TARP bailout, because it has no commercial banking business. The same will apply to Goldman Sachs.

In sum: With Glass-Steagall, LaRouche PAC intends to shut down Wall Street's criminal activity, and re-establish the U.S. Constitutional credit system, which will provide the basis for rebuilding the real economy.