Citizens Electoral Council of Australia
Home


Printer-friendly version

Citizens Electoral Council of Australia

Media Release  Friday, 11 July 2014

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
 

As European banks sink, Germany fast-tracks bail-in, but 600,000 Americans petition Congress for Glass-Steagall

The German government has issued four draft bills to introduce the European Union bail-in regime, of seizing deposits to prop up banks, by 2015, a year earlier than the EU had been considering. There can be only one explanation for this rush: fear of an imminent, systemic bank crash.

As this was happening in Berlin, the trans-Atlantic banking system was shaken by the insolvency of Portugal’s flagship private bank, Banco Espirito Santo (BES). BES’s parent holding company, Espirito Santo International (ESI), sent out e-mails on Wednesday advising clients it had to delay repayment of its short-term debt. The BES rushed to assure its clients not to worry, it would cover payments to those to whom it had sold defaulted ESI paper, and Portugal’s central bank reiterated that the BES is solvent. Those lies were issued, even as Portugal’s Expresso weekly reported that holders of Espirito Santo family companies’ debt had received proposals to swap that debt for equity in the failing bank. In other words: bail-in!

Portuguese government bond yields rose sharply. BES stock fell nearly 10 per cent, and is now trading at half its value of a month ago. Shares in Portugal Telecom, heavily invested in another Espirito Santo company debt which comes due on 15 July, lost almost 5 per cent. In short, a run on Portugal and its banks is on.

Last week, a bank run in Bulgaria sent tremors through the Eurozone; yesterday, fear fixated on the troubles of two Austrian banks as the potential “Credit-Anstalt” [the 1931 Austrian bank collapse that triggered the Great Depression] of 2014; today, it is Portugal’s financial system. Each are precursors of the gigantic global earthquake which American economist and statesman Lyndon LaRouche warned again, yesterday, is about to hit, and which no bail-in, no bail-out, only Glass-Steagall, can prevent.

Glass-Steagall

It is therefore a very welcome development that political pressure is intensifying in the U.S. to restore the Glass-Steagall Act, which from 1933 to 1999 completely separated speculative investment banks from commercial banks with deposits, to protect the day to day economy from banking crises by stopping investment bankers from gambling with ordinary people’s savings.

On 9 July petitions signed by nearly 600,000 American citizens, calling for the U.S. Senate to pass the 21st Century Glass-Steagall Act, were delivered to the bill’s primary sponsor, Senator Elizabeth Warren, as well as all other United States Senators, asking them to support the bill. The bill was introduced by Sen. Warren along with Sens. John McCain, Maria Cantwell, and Angus King.

“The original Glass-Steagall Act served our country well,” said Lisa Donner, Executive Director of Americans for Financial Reform, one of the organisations that circulated the petition, in a 9 July release. “It laid the foundation for an unprecedented half-century without financial panics or crises. Just as important, it contributed to a more right-sized banking system and one more focused on serving the economy and the society as a whole, rather than on enriching itself at others’ expense.”

The release quoted other groups which also circulated the petition: “When banks are allowed to continue gambling with our taxpayer-insured deposits, we are setting up our economy for another meltdown,” said Lisa Gilbert, director of Public Citizen’s Congress Watch division. “Not a single Wall Street banker has gone to jail for crimes that caused the financial crisis; the least Congress can do is make sure these bankers aren’t gambling with our money. It’s long past time to reinstitute Glass-Steagall,” said Becky Bond, political director of CREDO.

The Citizens Electoral Council is fighting hard to get Glass-Steagall enacted in Australia, to split up the too-big-to-fail Big Four and Macquarie banks, so that the Australian people are protected from the inevitable meltdown of the banks’ multi-trillion dollar bets in toxic derivatives and reckless speculation in the property bubble.

The looming global crisis means that such a Glass-Steagall separation is urgent—join the CEC’s fight now.

Click here for a free copy of the CEC’s magazine Glass-Steagall Now!, which shows how Glass-Steagall is the only solution to the financial crisis that protects the welfare of all people.

SPECIAL ANNOUNCEMENT: The ALP, Liberals and Greens are ganging up to make it harder for other parties to contest elections, by tripling the membership requirement. If you support the CEC’s ideas, it is time to act by joining as an Associate Member for 1 year, so the CEC can remain registered. Click here to join the CEC as a member.

Click here to refer others to receive regular email updates from the Citizens Electoral Council of Australia.




Citizens Electoral Council © 2008
Best viewed at 1024x768.
Please provide technical feedback to webadmin@cecaust.com.au
All electoral content is authorised by National Secretary, Craig Isherwood, 595 Sydney Rd, Coburg VIC 3058.