Banking institutions are more dangerous to our liberties than standing armies.
On June 28, 2011, the King County Democrats approved a resolution I proposed urging our Congressional representatives to reinstate the Glass Steagall Act (a copy of this Resolution is at the end of this article). I would like to explain what Glass Steagall is, how the repeal of Glass Steagall in 1999 led to our nation’s economic collapse in 2008 and why it is essential to restore Glass Steagall if we are ever to safely and confidently revive our economy.
What is the Glass Steagall Banking Act?
In 1933, FDR Progressive Democrats passed the Glass Steagall Banking Act to prevent bankers from turning our economy into a giant gambling casino for the super rich – as they had done in the 1920’s. For over 60 years, the Glass Steagall Banking Act protected us from economic disaster and helped maintain a stable economy.
1999 Glass Steagall Repealed to Deregulate Banks
Sadly, on November 12, 1999, under pressure from Wall Street bankers who financed their re-election campaigns, Congress passed the Gramm – Leach Act to repeal Glass Steagall and deregulate banks. Citibank alone spent $100 million in lobbying the Congress to repeal Glass Steagall, and other major Wall Street banks, led by JP Morgan, poured in more than $200 million in bribes of Congress in order to allow them to gamble with billions of dollars of other people’s money.
In Washington State, those who courageously voted against the repealed of Glass Steagall included Senator Patty Murray and Representatives Jay Inslee and Jim McDermott. Sadly Representatives Adam Smith (D), Norm Dicks (D), Brian Baird (D), Jennifer Dunn (R), Doc Hastings (R), George Nethercutt (R), Jack Metcalf (R) and Senator Slade Gordon (R) all voted for the repeal – an Act which eventually brought down or economy. Nationally, progressive leaders such as Dennis Kucinich, Paul Wellstone and Bernie Sanders voted against the repeal of Glass Steagall.
In 1999, shortly after the repeal of Glass Steagall, three leading banksters, Robert Rubin, Alan Greenspan and Larry Summers, all of whom promoted the deregulation of banks and the repeal of Glass Steagall, were featured on the cover of Time Magazine:
It took less than 9 years for casino capitalism to crash our economy and toss more than 10 million families out of their jobs.
Elizabeth Warren, one of the five outside experts who constitute the Congressional Oversight Panel of the Troubled Asset Relief Program, has said that the repeal of Glass Steagall contributed to the Global financial crisis of 2008. Nobel Prize-winning economist Paul Krugman has called Senator Phil Gramm “the father of the financial crisis” due to his sponsorship of the Act. Another Nobel Prize-winning economist Joseph Stiglitz has also stated that the repeal of Glass Steagall helped to create the economic crisis.
Sadly, in the summer of 2010, bank lobbyists managed to keep restoration of Glass Steagall out of the Dodd – Frank Wall Street Reform Act of 2010 – leaving our economy exposed to further harm from reckless bankers speculating with other people’s money.
Incredibly, despite the fact that the repeal of Glass Steagall cost tax payers over $2 trillion dollars and led to 10 million people losing their jobs, their health insurance and their life savings – and over 4 million people losing their homes, some members of Congress never even bothered to find out what Glass Steagall was.
October 2010: Congressman Reichert Admits he is Not Familiar with Glass Steagall
During a candidates’ forum on Saturday in Newcastle, WA (ten miles east of Seattle), US Congressman Dave Reichert admitted that he’s not familiar with the Glass-Steagall Act.
Reichert gave a meandering speech at the end of which the moderator asked for questions from the floor. A woman asked Reichert to describe his position on whether the Glass-Steagall Act should be reinstated. Reichert said he’s not familiar with the act.
January 26, 2011 Financial Crisis Investigation Commission releases its final report to Congress:
“The 2008 financial crisis was an ‘avoidable’ disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street.”
April 2011 Congresswoman Marcy Kaptur (D) files House Resolution 1489 Return to Prudent Banking Act which would reinstate Glass Steagall. Co-sponsors now include Dennis Kucinich (D) and Jim McDermott (D) among others including two Republicans. The bill is sitting in the current Congress.
Repeal of Glass Steagall led directly to the disasters of 2008.
Griftopia (2010) by Matt Taibbi
Griftopia is one of the most complete accounts of the events leading up to the 2008 Financial Collapse. It also provides details of how much wealthy banks have stolen from the American people – and how these crimes are continuing to rob us and our children.
Inside Job by Charles Ferguson (120 minutes) released October 2010. Inside Job can now be purchased on DVD.
‘Inside Job’ provides a comprehensive analysis of the global financial crisis of 2008, which at a cost over $20 trillion, caused millions of people to lose their jobs and homes in the worst recession since the Great Depression, and nearly resulted in a global financial collapse.
As Charles Ferguson reminded us during his Oscar acceptance speech, we are three years beyond the Wall Street crisis and taxpayers (you) got fleeced for billions. But still not one Wall Street exec is facing criminal charges. Welcome to your plutocracy…
Capitalism – A Love Story by Michael Moore (November 2009)
This video can be purchased as a DVD. It can also be watched for free on line. Open Firefox web browser, then go to http://topdocumentaryfilms.com/capitalism-love-story/
RESOLUTION URGING CONGRESS TO REINSTATE THE BANKING ACT OF 1933
Submitted by David Spring M. Ed.
KCDCC Representative, 5th Legislative District
Submitted to the King County Democratic Party Central Committee (KCDCC) on June 28, 2011
WHEREAS, an effective and stable banking system is essential to the functioning of our economy; and
WHEREAS, from 1933 to 1999, the Federal Banking Act, also known as Glass-Steagall, laws did protect the public interest by separating and regulating commercial banking, investment banking, insurance companies and securities firms; and
WHEREAS, the lack of such protection since 1999 has encouraged financial industry segments to exploit the financial system for their own gain, in violation of the public interest and to the severe detriment of the economy and general welfare; and
WHEREAS, the U.S. Congress and Senate have attempted to restore the Banking Act of 1933/Glass-Steagall laws by means of S.2886 Banking Integrity Act (now under the jurisdiction of the Senate Banking Committee), Senate Amendment 3884, H.R. 4375 Glass-Steagall Restoration Act, H.R. 4377 Return to Prudent Banking Act, and H.R. 4461 Banking Integrity Act) to benefit our nation and people; and
WHEREAS, on April 12, 2011, H.R. 4377 was reintroduced as H.R. 1489 Return to Prudent Banking Act stating, to repeal certain provisions of the Gramm-Leach-Bliley Act and revive the separation between commercial banking and the securities business in the manner provided by the Banking Act of 1933, the so-called Glass-Steagall Act, and for other purposes; and
WHEREAS, on April 12, 2011, Kansas District Federal Reserve Governor Thomas Hoenig recommended reclassifying government subsidized financial institutions as Government Sponsored Enterprises for the purpose of preventing them from engaging in activities not prescribed under Glass-Steagall standards; and
WHEREAS, the Financial Crisis Inquiry Report, issued January 2011, finds that our financial system is, in many respects, still unchanged from what existed on the eve of the crisis and the U.S. financial sector is now more concentrated than ever in the hands of a few large, systemically significant institutions.
NOW THEREFORE, Be it resolved by the Democratic Party of King County, Washington that:
The Democratic Party of King County urges the United States Congress, in order to prevent American taxpayers from having to bail-out financial institutions, to enact legislation to reinstate the Banking Act of 1933 laws to prohibit commercial banks and bank holding companies from investing in stocks, underwriting securities, investing in or acting as guarantors of derivatives transactions; and that the Democratic Party of King County shall transmit a copy of this Resolution to Senators Patty Murray and Maria Cantwell and to every member of the Washington State Congressional Delegation.
Resolution PASSED by the King County Democrats Central Committee on Tuesday, June 28, 2011.
What’s Next?.. Our future up to you!
It is up to us as concerned citizens to insist that our Congressional representatives reinstate Glass Steagall. Please call, write or email your Congressperson to urge them to co-sponsor and pass this important legislation. If we do not, we will soon be faced with paying for another $2 trillion bank bailout. Also please email this widely and pass it along to your Facebook friends and post to your Twitter feed.
As Franklin Roosevelt once said, the only real protection against a corporate takeover of our government is through personal active participation in Democracy.
Regards, David Spring M. Ed.