Citizens Electoral Council of Australia

Media Release Wednesday, 8 February 2017

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

UK Parliament committee blocks Glass-Steagall petition

An attempt by UK citizens to initiate a petition calling for the British Parliament to “pass Glass-Steagall now” has been blocked by the British Parliament’s Petitions Committee. The Citizens Electoral Council of Australia is working on this petition with UK supporters of Glass-Steagall, as part of a global campaign to get Glass-Steagall implemented in every country.

The petition reads:

Pass Glass-Steagall banking separation, now!

The IMF, the BIS and many financial experts are warning of a new global financial crash far worse than 2008, which will be caused by the same forces: the unbridled speculation in derivatives, and outright criminal activity, of City of London and Wall Street megabanks.

The USA’s 1933 Glass-Steagall Act, which strictly separated deposit-taking commercial banks from investment banks engaged in speculation, protected the US economy for 66 years. On top of London’s 1986 Big Bang deregulation, its repeal in 1999 led to the formation of the Too-Big-To-Fail banks. Restoring Glass-Steagall is non-partisan: 445 UK MPs and Lords from all parties voted for it in 2013; Bernie Sanders and Donald Trump campaigned for it in the 2016 US election. Pass Glass-Steagall, now!

Click here to view the petition on the UK Parliament’s petition website.

The Petitions Committee’s excuse for blocking the Glass-Steagall petition is so spurious that it borders on fraud. They state: “We rejected the petition you supported —‘Pass Glass-Steagall banking separation, now!’. It’s not clear what the petition is asking the UK Government or Parliament to do. We’re not sure what you would like the Government or Parliament to do. The Financial Services (Banking Reform) Act 2013 requires banks to ring-fence the retail and investment arms of their businesses by 2019, meaning the action you have requested is already law.” (Emphasis added.)

It took the Petitions Committee two weeks to come up with this excuse, having referred the petition to the parliamentary library. This then means they have no excuse, as the parliamentary library should know what a simple Google search reveals: that the most intense argument in the 2013 debate on the Financial Services (Banking Reform) Act 2013 was over the fact that ring-fencing was not Glass-Steagall!

MP after MP and Lord after Lord in that debate took issue with the proposal by the chairman of the Independent Commission on Banking, Sir John Vickers, to allow banks to get away with merely separating their commercial and investment divisions with a ring fence, or so-called Chinese walls, but retaining them within the same institution. Hundreds of MPs and Lords supported “full-scale Glass-Steagall” instead. This was first demonstrated in an Ipsos MORI opinion poll of MPs in December 2012, which was taken following Sir John Vickers’ recommendation of ring-fencing, and showed that more than 60 per cent of MPs, across all parties, “would support a full-scale separation in British banking, modelled on the Glass-Steagall reforms implemented in the 1930s in the United States”.

It was next demonstrated in the parliamentary debate in 2013, when both supporters and opponents of Glass-Steagall made clear that ring-fencing was not full Glass-Steagall separation. (See below for excerpts from that debate.)

It was finally demonstrated when 445 MPs and Lords voted for an amendment to the Financial Services (Banking Reform) Act 2013 to add Glass-Steagall as a reserve power, such that if ring-fencing were shown not to have worked after a period of time, full Glass-Steagall separation of the British banking system would automatically be implemented. The amendment narrowly failed, by 49 votes in the Commons and just nine votes in the Lords.

Call the Petitions Committee, insist on Glass-Steagall

A petition is a potentially powerful way of forcing Parliament to address an issue. If the petition gets 10,000 signers the Government is obliged to respond, and if it gets 100,000 signers Parliament must consider debating it. It is clear there are vested interests who do not want Glass-Steagall debated again in the UK Parliament, and those interests have a name: the City of London. It was because the City threw off banking separation after the 1986 Big Bang deregulation, that the US government came under pressure to repeal the Glass-Steagall Act in 1999, which opened the floodgates to the financial gambling that caused the 2008 crash. City bankers feel they dodged a bullet when Glass-Steagall was rejected in favour of ring-fencing in 2013; Wall Street was also protected from Glass-Steagall while Barack Obama was in the White House. Glass-Steagall came roaring back as a political issue in the 2016 US election, when both Bernie Sanders on the Democratic side and Donald Trump on the Republican side campaigned for it, and the reinstatement of Glass-Steagall was incorporated as a plank in the platforms of both parties. Now there is a huge campaign in the United States to pressure Trump to deliver on his promise. On 1 February a bipartisan group of Congressmen, led by Rep. Marcy Kaptur (D-Ohio), introduced new Glass-Steagall legislation (Return to Prudent Banking Act) in the House of Representatives. They delivered a heartfelt, sweeping condemnation of the Wall Street megabanks that have impoverished their constituents (excerpts on YouTube here). One of the most vehement opponents of Glass-Steagall in the USA is JPMorgan’s Jamie Dimon, who is also a big player in the City of London. He and others do not want the British Parliament to debate this again.

If you support Glass-Steagall, call or email the petitions committee to point out that their excuse is clearly incorrect, and insist they allow this petition to proceed. To prove ring-fencing is not Glass-Steagall, read out the following quotations from the 2013 debate. If they simply made a mistake, they should quickly reverse their decision. If they do not, they are demonstrating that it is not a simple mistake, but a political decision to not allow this crucial issue to be debated again, a decision which benefits only the City of London.

Petitions Committee phone: 020 7219 7614
Petitions Committee email: petitionscommittee@parliament.uk

Click here for the contact details of Petition Committee Chair Helen Jones (Labour) and other committee members.

Ring-fencing is not Glass-Steagall: excerpts from UK Parliament’s 2013 debate

Arguing against Glass-Steagall, the Cameron government’s Treasury Commercial Secretary Lord Deighton protested: “Glass-Steagall is not a supplement to ring-fencing, it is a separate alternative which would replace it; it is a game-changer…”

Labour Party peer Lord Barnett argued ring-fencing would not work: “Frankly, we now have an incredible situation. Despite that, it [ring-fencing] may eventually work, but we will not know that for donkey’s years… [W]e are told by others that the professionals do not think that the new system will work… The noble Lord, Lord Forsyth of Drumlean, who spent seven or nine years as an investment banker, told us that ‘bankers are extremely adept at getting between the wallpaper and the wall. If they can find a way to get around something they will’… As the noble Lord, Lord Lawson, said, Glass-Steagall—the separation regime in the United States—did not fail but succeeded for more than 60 years.”

Conservative peer Lord Lawson, the former Chancellor of the Exchequer under Margaret Thatcher: “I have always been in favour of full separation … We know that this works. It worked in the United States for many, many years under the Glass-Steagall arrangements and it is no accident that serious problems emerge after the Glass-Steagall Act had been repealed…. The ring-fence is a curious system, because there is one company with two subsidiaries—the retail bank and the investment bank—and we are told that they are completely separate, yet they are together… A number of the Vickers commission … do not know whether it will work either…”

The Conservative “Father of the House” of Commons, Sir Peter Tapsell: “What I mean by a complete return to Glass-Steagall is that we should have none of this nonsense of ring-fencing, which used to be called Chinese walls. It never works. Chinese walls turned out to be papier-mâché. I worked in the City for 40 years and I promise Members that it is impossible to make that work.”

Click here for additional excerpts from the historic UK Parliament debate of Glass-Steagall.

If you support the Glass-Steagall petition and would like to be kept updated on this fight, click here to register for updates and a free PDF of the CEC’s 2014 72-page pamphlet Glass-Steagall Now!