Citizens Electoral Council of Australia

Media Release Friday, 19 July 2013

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

U.S. moves closer to Glass-Steagall banking separation; Australia must follow

The Australian people face a banking crisis and a Cyprus-style confiscation of their savings unless the federal parliament follows the latest move in the U.S. to separate banks with deposits from gambling-addicted investment banks.

On 11 July four U.S. Senators—John McCain, Elizabeth Warren, Maria Cantwell and Angus King—joined forces to introduce the 21st Century Glass-Steagall Act for 2013, a bill to restore the strict separation of commercial and investment banks mandated in the Glass-Steagall Act 1933.

It follows Iowa Senator Tom Harkin introducing a Glass-Steagall bill called the Return to Prudent Banking Act in late-May, which is a sister bill to one in the House of Representatives called HR 129, which now has 70 sponsors and co-sponsors.

The original Glass-Steagall Act lasted 66 years until Wall Street banks spent hundreds of millions to bribe the U.S. Congress to repeal it in 1999; while it was in force, America’s banking system did not experience one major bank failure, but its repeal led directly to the gambling binge in toxic derivatives that blew up the global financial system in 2008.

Restoring Glass-Steagall is the definition of a “no-brainer”, but Wall Street and the City of London banks have threatened politicians to stop any moves in that direction; significantly, this latest bill from McCain, Warren et al. comes after banking giant JPMorgan Chase openly resorted to threats and intimidation to stop elected officials in the state of Delaware from supporting a resolution to restore Glass-Steagall—the Senators are showing that they refuse to be cowed by Wall Street.

The world needs Glass-Steagall

The day after the four U.S. Senators introduced their Glass-Steagall bill, London’s Financial Times ran an editorial headlined “Split the banks: A new Glass-Steagall Act is needed—not just in the U.S.”:

“An unlikely couple of U.S. senators, John McCain and Elizabeth Warren, have tabled legislation that would bring back a version of the 1930s Glass-Steagall Act. It is improbable that their proposal will see the light of day, such is the opposition in Congress. But the instinct of the two legislators that retail banking ought to be separated from riskier activities is sound and should be heeded…”

Noting the difficulties of regulating instruments such as derivatives, the FT continued, “Full-scale separation could be easier to enforce—the original Glass-Steagall Act was a mere 37 pages long. It would also eradicate the testosterone-charged culture of investment banking from retail activities, which require patient stewardship. As the Libor scandal has shown, when the two cultures conflate it is the traders who typically have the upper hand. Without deposits, investment banks would find it harder to fund themselves, which would cap their size. This could inject competition into a sector dominated by a few players. The crumbling of the giants would spare politicians from their mighty lobbying influence… But even if the public purse is used, it should not subsidise casinos. When popular discontent with the banks is so high, this powerful argument cannot be ignored.”

Citizens Electoral Council leader Craig Isherwood stated today, “Australia also needs a Glass-Steagall banking separation, desperately. Anyone who claims otherwise is deliberately lying. And as we see from events in the U.S., they are lying to protect the vested interests of the crooked gamblers who run the banks.

“Right now, the very people who oppose Glass-Steagall in Australia are preparing to legislate to give the authorities the power to confiscate all bank accounts, to prop up the big four banks in the event their trillions of dollars in derivatives gambling sends them bust.

“Many experts around the world are expecting the next global financial eruption within weeks, so this deposit-stealing could be on the cards sooner than people might think. We Australians can either docilely submit to a Cyprus-style robbery, or we can fight for the only solution—Glass-Steagall.

“To fight,” Isherwood concluded, “join the CEC.”

Click here to sign the parliamentary petition for Glass-Steagall.

Click here to order a free Glass-Steagall organising pack and find out what Glass-Steagall would mean for Australia.

Click here to join the CEC as a member.

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