The following article was written by Kenric Ward and posted to the Washington Examiner website. The article highlights the coming Week of Action in Washington DC where members of the LaRouchePAC Policy Committee will be engaged in intensive meetings on Capitol Hill.
July 13, 2013
By: Kenric Ward
WASHINGTON—Pushing to restore congressional power, four U.S. senators introduced a 21st Century Glass-Steagall Act this week to rebuild the historic wall between commercial and investment banks.
Sens. Elizabeth Warren, D-Mass., John McCain, R-Ariz.; Maria Cantwell, D-Wash.; and Angus King, I-Maine, followed the lead of Sen. Tom Harkin, D-Iowa, who introduced reform legislation S.985 — last month.
The moves were noted by Lyndon LaRouche, a former presidential candidate, economist and prime proponent of Glass-Steagall.
"Wall Street is hopelessly bankrupt...it is going to collapse," LaRouche predicted. "Congress as a whole is the instrument that can make decisions which will enable us to solve these problems."
In the upcoming week, LaRouche policy teams will converge on Capitol Hill with scores of activists and hundreds of letters from city councils, state lawmakers, tea parties, scientists and farmers supporting Glass-Steagall reforms as the keystone to economic recovery.
'DANGEROUS GREED, EXCESSIVE RISK-TAKING'
The Glass-Steagall bills would separate traditional banks, which have savings and checking accounts and are insured by the Federal Deposit Insurance Corp., from riskier financial institutions that continue to speculate in exotic derivatives, hedge funds, credit-default swaps and other arcane paper debt deals.
Warren's office said her legislation, yet to be designated with a bill number, would clarify regulatory interpretations of banking law provisions that undermined the protections under the original Glass-Steagall.
The first-term senator said her bill would make "Too Big to Fail" institutions smaller and safer, minimizing the likelihood of a government bailout like the one that occurred in 2008.
"Since core provisions of the Glass-Steagall Act were repealed in 1999, shattering the wall dividing commercial banks and investment banks, a culture of dangerous greed and excessive risk-taking has taken root in the banking world," said McCain.
"Big Wall Street institutions should be free to engage in transactions with significant risk, but not with federally insured deposits."
Warren said the biggest banks continue to threaten the economy.
"The four biggest banks are now 30 percent larger than they were just five years ago, and they have continued to engage in dangerous, high-risk practices that could once again put our economy at risk."
Cantwell, who has tried to win passage of similar legislation in the past, said, "Too many Main Streets across America have paid the price for risky gambling on Wall Street."
She said the new measure "would restore clear bright lines that separate risky activities from the traditional banking system. It's time to restore faith in our financial institutions by rebuilding the firewall that protected our economy for decades in the wake of the Great Depression."
King, an independent who formerly served as governor of Maine, said, "While recent efforts at financial sector regulatory reform attempt to address the 'too big to fail' phenomenon, Congress must take additional steps to see that American taxpayers aren't again faced with having to bail out big Wall Street institutions while Main Street suffers."
BACK TO THE FUTURE; GAINING BIPARTISAN SUPPORT
The original Glass-Steagall legislation was introduced in response to the financial crash of 1929. Starting in the 1980s, regulators at the Federal Reserve and the Office of the Comptroller of the Currency reinterpreted longstanding legal terms in ways that slowly broke down the wall between investment and depository banking and weakened Glass-Steagall.
In 1999, after 12 attempts at repeal, Congress passed the Gramm-Leach-Bliley Act to repeal the core provisions of Glass-Steagall. The revocation was signed by President Bill Clinton in the waning days of his administration.
Now, momentum for Glass-Steagall's re-instatement is gaining traction on Capitol Hill and around the country.
House Bill 129 — co-introduced by Reps. Marcy Kaptur, D-Ohio, and Walter Jones, D-N.C. — has attracted 70 bipartisan co-sponsors.
Lawmakers in South Dakota, Maine, Indiana, and Alabama have passed resolutions calling for Glass-Steagall's return. Similar measures are pending in Rhode Island, Pennsylvania, North Carolina, New Jersey, New York and Delaware.
The Warren-McCain-Cantwell-King bill is a significant step toward a return to Glass-Steagall, though the measure would not take full effect until five years after passage.
Economists who support Glass-Steagall call it a far more fundamental and effective reform than the current Dodd-Frank law.
Instead of securing commercial bank holdings, Dodd-Frank lays the groundwork for a European-style "bail-in," allowing authorities to seize and freeze deposits in times of economic crisis. This has already happened in Cyprus.
BANKING AGAINST A 'FASCIST NATION'
LaRouche, in a national webcast Friday night, drew a parallel between Wall Street gambling and job-killing government austerity programs.
"We have to pull back the banking system through Glass-Steagall," he said Friday. "Get rid of the shady business going on behind the scenes."
"It's not going to be pretty," LaRouche cautioned. "Glass-Steagall will mean foreclosing a lot of garbage. It will cancel a lot of the banking operations, because they are bankrupt."
In exchange, LaRouche said Congress has the authority to create a credit system which will be run through a new, stabilized banking system.
"We will have to put up federal guarantees to increase productivity. We will go through a process which was an echo of what Franklin Roosevelt did, when he put most of Wall Street in jail."
But noting that expanding presidential power today threatens to engineer a "fascist nation," LaRouche called for Congress to exercise its constitutional powers.
"We need agreement by the leading members of Congress in a bipartisan way. Otherwise you have chaos and mass debt. If Congress does the job it can do, we can fix this."
Alluding to high rates of unemployment and under-employment, as well as an emerging food-production crisis, LaRouche called Glass-Steagall the core of reforms needed to save the country.
"The purpose is to rebuild (America), to get it out of the dirt, and back into the pride it used to represent."
Toward that end, LaRouche activists will be on Capitol Hill the week of July 15 to meet with lawmakers, push for Glass-Steagall reforms and even stage a singing rally or two.
Kesha Rogers, a two-time Democratic Party congressional nominee from Houston, said the mobilization seeks to "take the Glass-Steagall fight to the next level."
Rogers, who will be in D.C., has called for the impeachment of Barack Obama and says a "full recovery program requires a total reorganization and restructuring of Congress."
"We have to break apart the party politics and bring together the best minds of Congress to act in the interest of the nation. For too long, Congress has been more aligned with Wall Street and London financial interests," she told the Examiner.
