From Our Archives: Restore the Glass-Steagall Now!

May 15, 2010 (LPAC)-- The following is the text of a LaRouchePAC Actuality, from Sept. 28, 2008, in which LaRouche first launched the Glass-Steagall campaign.

LAROUCHE: RESTORE THE GLASS-STEAGALL ACT NOW!

CG Intro:

The failure of Washington Mutual two days ago brought to 13 the number of U.S. banks to fail this year, and the pace is accelerating.

Many eyes have now turned to Wachovia Corp., the giant North Carolina-based holding company, as the next big bank to fail, and Wachovia is widely reported to be in "fire sale" talks with Citigroup, Wells Fargo, and Spain's Banco Santander.

Such a merger may occur, or the buyers may wait as J.P. Morgan Chase did with Washington Mutual and buy the bank from the FDIC after it closed. However it occurs, it is likely that Wachovia will cease to exist as an independent bank.

LaRouche: Restore the Glass-Steagall Act Now!

Transcript:

Lyndon LaRouche: We're at the point, that in addition to the three measures I prescribed since summer of 2007, that we have to add another provision, as a result of the degree of corruption which has been introduced into the system since the summer of 2007.

We now have a corruption of banks, of what were once legitimate banks, through the contamination with the market toxic waste, such that we can't simply reorganize and protect banks in a simple way. We're going to have to, in a sense, look at each bank, determine what corresponds to a legitimate bank under Glass-Steagall standards, and take that part of the bank, that corresponds with Glass-Steagall standards, and put that under protection: Which means, you'll essentially probably have a bank in the same place, physically, but you'll have the operation of the bank, as a functioning bank will be confined to the Glass-Steagall standard.

The rest of the funds, or the claims associated with what is that bank now, normally—this mixed bank of legitimate and illegitimate credit and debt—we're going to have to put the other part, the part that comes out of investment banking, through mergers and so forth, that will be frozen. And it has to be frozen under Federal and state bankruptcy proceedings—chiefly Federal.

So that will be essential. Because we must protect the normal banking functions of chartered banks, and their assets, and we must separate that, from the dubious claims to assets, which is the other stuff that comes in from the bankrupt investment banks.

So that's going to have to be done. That's the essential one change in what I prescribed last year, 2007, that has to be made now.

This means we will also have to have a very rapid restoration of the original Glass-Steagall legislation, and put that into effect immediately, as a supplement to the protection and reorganization of banks which otherwise would be bankrupt.