------ Forwarded Message > From: "dasg...@aol.com" <dasg...@aol.com> > Date: Tue, 29 Dec 2009 06:25:50 EST > To: Robert Millegan <ramille...@aol.com> > Cc: <ema...@aol.com>, <j...@aol.com>, <jim6...@cwnet.com> > Subject: War¹ on Wall Street? Those Who Sank the Economy Demand NO > REGULATION >
> FREE market? "Today, only 4 financial institutions hold half of all > mortgages, issue two-thirds of credit cards, and control 40% of all bank > deposits. In addition, the face value of derivatives at commercial banks has > grown to $290 trillion, 95% of which are held by 5 financial institutions." > > War¹ on Wall Street? > Bankers slam regulations that were in place 10 years ago > By Daniel Tencer <http://rawstory.com/2009/author/danielt/> > Monday, December 28th, 2009 -- 11:46 am > http://rawstory.com/2009/12/war-wall-street-bankers/ > <http://www.stumbleupon.com/submit?url=http://rawstory.com/2009/12/war-wall-st > reet-bankers/&title=War¹ on Wall Street? Bankers slam regulations that were > in place 10 years ago> > From 1933 to 1999, the Glass-Steagall Act separated commercial banking from > investment banking, preventing deposit-taking banks from using consumers' > money for risky stock market investments. > > For two decades prior to Glass-Steagall's repeal, the financial sector > experienced robust, record-breaking growth. And less than a decade after the > law was repealed, the US's financial system experienced near-total collapse, > forcing the government to bail the big banks out with hundreds of billions in > taxpayers' money. > > Yet, despite these basic facts, bankers are saying that a return to the > Glass-Steagall Act -- which would see some of the US's largest banks get > broken up -- would have a "severe effect" on the banking system, and are > warning that it would mean banks would lend less to businesses and consumers, > further hurting the economy. > > ³The impact on Wall Street would be severe,² Wayne Abernathy, a vice president > at the American Bankers Association, told Bloomberg news service > <http://www.bloomberg.com/apps/news?pid=20601109&sid=aeQNTmo2vHpo&pos=10> . > > The issue of returning to the Glass-Steagall Act -- which was enacted in the > 1930s as a way of preventing another stock market crash like the one that > happened in 1929 -- has become a hot topic in Washington ever since Sen. John > McCain (R-AZ) and Sen. Maria Cantwell (D-WA) put forward a bipartisan bill > <http://rawstory.com/2009/12/senators-push-wall-street-restructuring-depressio > nera-rule/> to bring back some of the provisions in the original > Glass-Steagall Act. > > Bringing back the wall between investment and commercial banking means that > some of the highest-profile banks in America -- including Goldman Sachs and > Citigroup -- would have to be broken up. And while that idea sends shudders > down the spines of Wall Street traders, it has plenty of appeal on Main > Street, where anger with the bank bailout has been simmering for more than a > year. > > DEVASTATION ON WALL STREET -- OR NO CHANGE? > > Yet not all opponents of Glass-Steagall believe it would have a "severe" > impact on Wall Street -- some are saying it would change nothing at all. > > ³If you look at what happened, with or without Glass-Steagall, it would have > made no difference,² Bloomberg quoted H. Rodgin Cohen, a corporate lawyer > involved in many cases stemming from last year's financial collapse. Bloomberg > reported > <http://www.bloomberg.com/apps/news?pid=20601109&sid=aeQNTmo2vHpo&pos=10> : >> >> >> Cohen and others say the law wouldn¹t have saved Bear Stearns or Lehman >> Brothers Holdings Inc., both of which were pure investment banks, from >> collapse. And the government would not have been able to enlist JPMorgan >> Chase & Co. to take on the assets of Bear Stearns or allow Goldman Sachs >> Group Inc. and Morgan Stanley to become bank holding companies, giving them >> access to the Federal Reserve¹s discount window. >> >> >> Rather than split up banks, regulators should provide better supervision and >> require tougher capital requirements, said Cohen (who was also involved on >> behalf of banking clients in shaping the bill that dismantled parts of >> Glass-Steagall). > > Other defenders of the status quo have made far less substantial arguments. > > "I think going back to Glass-Steagall would be like going back to the > Walkman," said an unnamed Treasury official > <http://www.huffingtonpost.com/2009/12/17/mccain-cantwell-battle-th_n_395748.h > tml> . > > Political observers say that the McCain-Cantwell bill has only a slim chance > of becoming law. When the bill was tabled earlier this month, Sen. Chris Dodd > (D-CT), chairman of the Senate Banking Committee, said it would be "pretty > difficult > <http://www.reuters.com/article/idUSTRE5BG3YP20091217?type=politicsNews> " to > garner the support needed in the House and Senate to pass the legislation. The > current financial reform measures working their way through Congress do not > include anything quite as landscape-shifting as a return to Glass-Steagall. > > For some economic analysts, the push to bring back Glass-Steagall amounts to > war. > > ³Congress is at war with Wall Street,² Lyle Gramley, a former board member of > the Federal Reserve, told Bloomberg. ³They perceive Wall Street as being the > root source of our financial crisis, and they want to do something to make > sure that doesn¹t happen again.² > > Yet for other observers, it isn't war enough. > > "The repeal of Glass-Steagall has exposed the U.S. economy to a level of risk > that is simply unacceptable," House Rep. Maurice Hinchey (D-NY), who > introduced a bill similar to McCain-Cantwell in the House, wrote in a recent > column > <http://www.huffingtonpost.com/rep-maurice-hinchey/bring-back-the-glass-stea_b > _394988.html> . >> >> >> Today, just four huge financial institutions hold half the mortgages in >> America, issue nearly two-thirds of credit cards, and control about 40 >> percent of all bank deposits in the U.S. In addition, the face value of >> over-the-counter derivatives at commercial banks has grown to $290 trillion, >> 95 percent of which are held at just five financial institutions. We cannot >> allow the security of the American economy to rest in the hands of so few >> institutions. > ------ End of Forwarded Message
