Banks Too Big To Regulate Buy Democrats To Insure That Glass Steagall Stays Repealed

Posted by politicalpartypooper on July 1, 2010

I was gently scolded the other day by democrats for being against a Financial Services reform bill that doesn’t go nearly far enough.  In fact, I support Senator Russ Feingold’s decision to vote against that bad bill.  One of the items missing from the bill is Glass Steagall safeguards.  According to Feingold:

“At the start of this process I made clear that I had a simple test for financial reform — will it stop another financial meltdown? This bill fails that test, and I won’t support legislation that fails to protect the people of Wisconsin from the pain of another economic disaster. And I don’t need to be lectured about this issue by people who supported the repeal of Glass-Steagall, which paved the way for this terrible recession.

I had hoped I would be able to support the legislation, given the clear need for strong reform. I cosponsored a number of critical amendments during Senate consideration of the bill including a Cantwell-McCain amendment to restore Glass-Steagall safeguards.”

I was told by Democrats that no one supported restoring Glass Steagall.   No one.  My response was that there were supporters, but that amongst Democrats, they favored doing nothing that would upset their sugar-daddies; namely big banks.  I’ve mentioned OpenSecrets.org too many times on this blog and in comments on others to bother adding yet another link to this story.  If you want to go there to see for yourself how your Democrats (and Republicans) fund their campaigns, use the link on the right sidebar of my blog.

I digress.  The point of this story is, three cheers for Senator Feingold!  He gets an ‘attaboy for having some balls.  In 1999, the Gramm-Leach-Bliley Act, which repealed important sections of the Glass Steagall act, passed by a nearly party line vote, with Republicans voting to repeal the second Glass Steagall Act and Democrats voting against.  Glass Steagall prevented investment banks and commercial banks from merging, in its simplest terms.  In essence, it was designed to force securities creators to be transparent, and it ended up protecting America by not allowing banks to become too big to fail.  Republicans didn’t like that one bit.

Democrats have had ten years to get used to the idea, and now they don’t like the idea of repealing the Glass Steagall repeal, either.  What changed in ten years?  The power in the House, that’s what.  The party in power is now the Democrats, and they’re the ones getting most of the dough from Wall Street and banks too big to fail.  If you argue with a Democratic voter today, he’ll tell you reinstating Glass Steagall isn’t possible in this economic climate; and he’ll blame Republicans.  He’s wrong.  Republicans and Bill Clinton are to blame for repealing Glass Steagall, but several Republicans have iterated that Glass Steagall should indeed become the law of the land once again, including John McCain, who voted “aye” to repeal Glass Steagall in 1999.  With a dominating majority in the House and one or two more Republican votes in the Senate, Restoring Glass Steagall would be a slam dunk.

DEMOCRATS DID NOT EVEN TRY.  That’s according to Russ Feingold:

“Each of those amendments would have improved the bill significantly, and each of them either failed or was blocked from even getting a vote.”

Democrats like to call themselves the Party that does the right thing.  In this case, the right thing is to restore Glass Steagall.  Anything short of that is the wrong thing.  Anything short of that makes you look like you are on the take for big banks.  If it looks like a duck, walks like a duck, and smells like a duck….     Ω


2 Responses to “Banks Too Big To Regulate Buy Democrats To Insure That Glass Steagall Stays Repealed”

  1. Jeff Brower said


    It has become evident that mega banks no longer consider loans and deposits to be profitable. Now, only high-risk trading on a massive scale is desirable. Mega banks now think they are an industry unto themselves — even though they make nothing, export nothing, and innovate no new technology.

    Glass-Steagall kept our economy safe for 66 years, plus 5 more if you count the time, after repeal, needed for too-big-to-fail mergers and proprietary, high-risk trading to fully infect our financial system. The presence of Glass-Steagall encouraged the non-glamorous but essential business of loans and deposits. Now, the 6 remaining mega banks don’t care about providing such basic services to the real sector. And they care even less about stability and maintaining our technological lead vs. India and China. They can engage in risky trading knowing they will never face bankruptcy, no matter how badly they screw up. What other business can say that? What *small* business can say that? Now, gambling is firmly established as the major business of 6 mega banks with combined assets worth more than 63% or our GDP. Is that what the US stands for? Some financial corporations get special treatment? Gambling is a major “industry”?

    Things are going to get a lot worse before they get better. Glass-Steagall was one of those fortunate laws that helped form the foundation for incredible US business success over many decades. Time will show how valuable it was.


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