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Citizens Electoral Council of Australia

Media Release  1st of August 2012

Craig Isherwood‚ National Secretary
PO Box 376‚ COBURG‚ VIC 3058
Phone: 1800 636 432
Email: cec@cecaust.com.au
Website: http://cec.cecaust.com.au
 

‘Shatterer of Glass-Steagall’ calls for its restoration

The former boss of giant U.S. bank Citigroup, Sanford (Sandy) Weill, who possesses a giant wooden plaque listing his accomplishments which includes the line, “The Shatterer of Glass-Steagall”, has shocked the banking world by calling for its restoration.

Weill is falling in with the global push to restore Glass-Steagall long associated with U.S. physical economist Lyndon LaRouche, which some of the leading bankers in Britain recently boosted following the revelations of 16 London banks flagrantly manipulating the benchmark London Interbank Offered Rate to rip off the world.

But it is Weill’s call that has shocked Wall Street, because he was the key lobbyist for the repeal of Glass-Steagall. In 1998 Greenspan granted a waiver to Travelers Insurance Company, then headed by Sanford Weill, to buy Citibank. Travelers owned Salomon Smith Barney, a large investment bank. The Travelers-Citibank merger, for the first time since the passage of Glass-Steagall in 1933, allowed a single bank holding company to own a commercial bank, an insurance company, and an investment bank. This waiver spelt the beginning of the end of Glass-Steagall [repealed a year later through the Gramm-Leach-Bliley Act, which Congressmen variously dubbed the Citi-Travellers Bill, or Sandy’s Bill], and the birth of institutions that are “too big to fail”.

“In the space of a few seconds, Sanford Weill disavowed the work of a lifetime,” reported the July 27 The Australian. “Mr Weill, who built up Citigroup into a banking behemoth … yesterday called for the break-up of the big banks,” the article continued.

“The stunning suggestion from the man who created Citigroup from the 1998 merger of Travelers and Citibank lit a bonfire under a simmering ‘too big to fail’ debate”, continued the Australian Financial Review of the same day. “The Citigroup merger required a waiver of the Glass-Steagall Act—which had prohibited such combinations since 1933—until the law could be repealed a year later, in 1999,” the Review revealed.

On July 25 American Banker Magazine reported that both Democratic and Republican congressmen were thunderstruck by Sandy Weill's comments, “suggesting a new openness to the argument that the nation’s largest banks should be broken up.” “It is absolutely huge that Sandy Weill has called for the break-up of the big banks,” one Democratic Representative was quoted saying.

The magazine was brave enough to acknowledge the heretofore lone voice of Lyndon LaRouche on the issue: “Supporters of Lyndon LaRouche have recently been distributing pamphlets outside the Capitol calling for the return of Glass-Steagall—a symbol of how politically marginal the debate about breaking up the big banks has been until now. …” [emphasis added] In a video interview, the magazine’s editor-in-chief observed, “One of the things that was really interesting about it was that it seemed that this was the moment that actually the breakup the big banks movement started to get some traction, at least in the popular press, maybe in Washington.”

The July 26 New York Times editorial did their own Olympic-quality backflip on Glass-Steagall, following Weill’s, declaring, “While we are on this subject, add The New York Times editorial page to the list of the converted. We forcefully advocated the repeal of the Glass-Steagall Act. … Having seen the results of this sweeping deregulation, we now think we were wrong to have supported it.”

The Glass-Steagall debate has also broken into popular entertainment, featuring in an episode of the new U.S. docudrama Newsroom, in which a character offers the following excellent explanation of Glass-Steagall: “Congress wanted to put a firewall in between the investment banks and the commercial banks. They wanted to make sure that Wall Street could melt to the ground, and the commercial banks wouldn’t be touched. They passed a law, the Glass-Steagall Act: Now, you could be Gordon Gekko [tycoon from movie ‘Wall Street’] or George Bailey [community banker from ‘It’s a Wonderful Life’], but you couldn’t be both.” [Emphasis added]

LaRouche affirmed that what began a few weeks ago in Britain, has now exploded onto the front burner in the United States. “These are people who have chosen the future,” he said. “They have changed their direction of commitment, to support Glass-Steagall, when they had been, up to that point, exactly in the opposite direction.”

The restoration of Glass-Steagall is the centerpiece of the CEC’s resolution, The Future of Australia: Develop or Die. As the CEC exposed last week, the corruption of the financial system on display in the manipulation of the LIBOR reaches deep into Australia, through the direct impact of the LIBOR itself and the possible manipulation of Australia’s LIBOR-equivalent, the BBSW. This flagrant corruption goes hand in hand with the deregulation of the economy kick-started in 1983 by Hawke and Keating and continued by their Liberal accomplices. Only implementing the Glass-Steagall principle can reverse the policies that opened up the financial affairs of ordinary Australians and essential government services to undisguised looting by the global banking cartel. As honest commentators admit, it is Lyndon LaRouche—and the CEC in Australia—who has led this fight. To join the fight: endorse the Resolution, confront your elected representatives and demand they do the same, and join the CEC.

Click here for a DVD and EIR magazine article on the takedown of Glass-Steagall, including the role of Sandy Weill.

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