{"id":256758,"date":"2016-07-19T19:12:59","date_gmt":"2016-07-19T19:12:59","guid":{"rendered":"http:\/\/rinf.com\/alt-news\/?p=256758"},"modified":"2016-07-19T22:54:39","modified_gmt":"2016-07-19T22:54:39","slug":"wall-street-angry-trump-says-restore-glass-steagall","status":"publish","type":"post","link":"http:\/\/rinf.com\/alt-news\/breaking-news\/wall-street-angry-trump-says-restore-glass-steagall\/","title":{"rendered":"Wall Street Angry that Trump Says Restore Glass-Steagall"},"content":{"rendered":"

<\/b>Eric Zuesse<\/span><\/p>\n

On July 18th, Rob Nichols, the President of the American Bankers\u2019 Association, which is controlled by the mega-banks, struck back against Republican Presidential candidate Donald Trump. Nichols criticized Trump\u2019s insistence to restore the Democratic U.S. President Franklin Delano Roosevelt\u2019s top reform of the U.S. economy, the Glass-Steagall Act, which prevented another taxpayer bailout of Wall Street firms for their gambling losses \u2014 it was the law President Bill Clinton with overwhelming Republican support in 1999 repealed. Trump is committing himself against that Clinton-Republican repeal of FDR\u2019s law. Trump insists it be restored so that there won\u2019t be a repeat of the Bush-Obama Wall Street bailout.<\/span><\/p>\n

ABA chief Nichols\u00a0told Morning Consult<\/span><\/a>,\u00a0\u201cAmerica\u2019s banking industry is well poised to fuel economic growth and job creation,\u201d and so they should continue to be supported by the government. He called Trump\u2019s stand to restore Glass-Steagall “a return to Depression-era regulation that would restrain banks\u2019 ability to drive our economy\u00a0forward. All of our bank regulatory agencies have agreed that Glass-Steagall would not have\u00a0prevented the crisis or the housing market collapse.\u201d<\/span><\/p>\n

Many economists disagree with the ABA on that, and have called for restoration of the Glass-Steagall Act.<\/span><\/p>\n

The major newsmedia and politicians refer to Glass-Steagall for its supposedly capping bank-size<\/a><\/span>, but it never actually did any such thing: it instead separated\u00a0commercial banks<\/span><\/a>\u00a0(lenders to consumers and businesses) from\u00a0investment banks<\/span><\/a>\u00a0(stockbrokers and other market-makers for the sale of financial gambles) and from insurers (which take on the risks that other financial firms avoid). It never established any cap on bank-size.<\/span><\/p>\n

What produced the 2008 crash was the Clinton-Republican\u00a0Gramm-Leach-Bliley Act<\/span><\/a>, named after the three conservative Republicans (Phil Gramm, Jim Leach, and Tom Bliley) who wrote it. Sanford Weill, then merely the head of Travelers Insurance, was a financial empire-builder who wanted his firm to buy Citibank, so as to produce the first financial conglomerate, Citigroup \u2014 a merger which the Glass-Steagall Act would have blocked from happening. Weill\u2019s Clinton-Administration friends Robert E. Rubin and Lawrence Summers had no trouble convincing their boss to say yes to Gramm-Leach-Bliley, though this would toss out the core of Democrat FDR\u2019s lasting heritage and restore the cause of the Great Depression: Wall Street\u2019s gambling with depositors\u2019 savings \u2014 gambling with assets that are so crucial the government would be politically compelled to backstop to prevent bankrupting tens of millions of people, savers who had made no error. It\u2019s a Hobson\u2019s choice of either revolution or else Wall Street bailouts; that Hobson\u2019s choice is what Glass-Steagall ended.<\/span><\/p>\n

The great journalist who goes by the pseudonym \u201cTyler Durden\u201d headlined on 25 July 2012,\u00a0“In Defining Hypocrisy, Weill, Who Led Repeal Of Glass\u00a0Steagall, Now Says Big Banks Should Be Broken Up\u201d<\/span><\/a>\u00a0and he quoted Weill\u2019s recent statement, \u201cI am suggesting that [big banks] be broken up so that the taxpayer will never be at risk, the depositors won\u2019t be at risk, the leverage of the banks will be something reasonable.\u201d Weill gave as his excuse for his 180-degree turnabout, \u201cThe world we live in now is different from the world we lived in ten years ago,\u201d but, in regard to the issue at hand, he was lying: his argument there was equally applicable today as it was in 2000 when he induced Clinton-Republicans to repeal it, and as it was in 1933 when FDR signed Glass-Steagall into law. Weill, after all, was saying this after the 2008 crash, which produced a huge taxpayer bailout of his own and the other Wall Street firms.<\/span><\/p>\n

On 8 August 2012, Pam Martens \u2014 the best of all reporters about Wall Street \u2014 bannered “The Untold Story of the Bailout of Citigroup\u201d<\/span><\/a>\u00a0and she recounted the relevant history:<\/span><\/p>\n

“The Citigroup merger occurred in 1998. Glass-Steagall was repealed on November 12, 1999 with the enactment of the Gramm-Leach-Bliley Act. It was just nine years later that Citigroup was teetering on the brink of collapse after holding $1.3 trillion off its balance sheet, gorging on toxic assets, and failing to disclose an extra $39 billion in subprime mortgage exposure. (As we discussed yesterday in Part One<\/span><\/a>, we still don\u2019t know just how bad Citigroup\u2019s accounting was because the SEC has redacted much of that information from public records on its web site.)\u201d<\/span><\/p>\n

A financial-industry arbitrator headlined in American Banker magazine (which represents only medium-and-small-sized banks), on 11 December 2015, \u201cA New Glass-Steagall Would Be Too Good for Banks to Pass Up\u201d<\/span><\/a>, and he noted that the megabanks\u2019 allegtions that Glass-Steagall is incompatible with modern finance is phony. Akshat Tewary wrote: \u201cThe proposed 21st Century Glass-Steagall Act<\/span><\/a> \u2014 sponsored by Democratic Sen. Elizabeth Warren and Republican Sen. John McCain \u2014 mirrors many of the features of the original law, while also accounting for more recent innovations in banking and finance.\u201d<\/span><\/p>\n

Only by deception can the megabanks oppose Glass-Steagall; but it\u2019s a multibillion-dollar deception which benefits the top financial executives, and so it is backed up by an enormous lobbying operation, and any Presidential candidate who fails to go along with that is going far out on a limb.<\/span><\/p>\n

The issue here was never really about bank size, however; it was always an issue of risk-transference, from Wall Street to Main Street (like: from the American Bankers\u2019 Association, to American Banker magazine) \u2014 to transfer the megabanks\u2019 gambling risks to the public while the rewards remain privatized to the megabank executives via their pay and bonuses. That\u2019s what they want. In other words: it\u2019s a scam, and part of the money from it ends up advertising politicians and fooling voters.<\/span><\/p>\n

And for Rob Nichols and Wall Street to criticize “a return to Depression-era regulation\u201d is for them to be seeking to go back to what had preceded the 1929 Crash.<\/i> That\u2019s what we have now, but in the form of the Clinton-Republicanism (\u2018bipartisanship\u2019) that produced the 2008 crash, and that then was cumbersomely dealt with in the Dodd-Frank Act, which was co-written by Wall Street and Democrats, and which has, after 2008, produced a weak economic recovery, which goes almost only to the wealthiest 1%. That\u2019s the Obama version of the Clinton plan. But it\u2019s not only excruciatingly cumbersome; it is a cumbersome band-aid covering a gaping bleeding wound: the post-2008 economy.<\/span><\/p>\n

Glass-Steagall wasn\u2019t any such cumbersome law as Obama passed; it was, instead, the \u201cDepression-era regulation\u201d that very simply separated, from one-another: commercial banking, from investment banking, from insurance. It said: you can do any one of those, but not more than one.<\/span><\/p>\n

Perhaps Donald Trump has found some way to run a Presidential campaign that doesn\u2019t depend upon the good will, and megabuck donations, from Wall Street, because it now seems extremely likely that he\u2019s not going to be getting much in the way of donations from them. He\u00a0hasn\u2019t in the past,<\/span><\/a>\u00a0and he now seems even less likely to in the future.<\/span><\/p>\n

Nichols presented his criticism in a \u2018bipartisan\u2019 way, but it wasn\u2019t even really bipartisan: the situation is actually very different when\u00a0a Bernie Sanders, who won\u2019t be the President, coerces Hillary Clinton, who might, to accept in \u2018her\u2019 Party platform a demand for restoring Glass-Steagall; it is entirely different when a Donald Trump, who actually might become President<\/i>, demands that it be in his<\/i> Party\u2019s platform.<\/span><\/p>\n

The best way for Trump to try to squeeze some lemonade out of this otherwise sour (for a Presidential nominee) political lemon that he\u2019s now pushing, would be for him to make one of his major campaign themes against Hillary Clinton: \u201cIf I become President, then Elizabeth Warren\u2019s 21st Century Glass-Steagall Act<\/span><\/a> will become the law of this land.\u201d How could Hillary trump that? For her even to challenge it (which would require her to repudiate her entire record) would cause people to distrust her even more than they already do. Maybe this would even be Trump\u2019s call of \u201cCheckmate!\u201d against her.<\/span><\/p>\n

\u2014\u2014\u2014\u2014\u2014<\/span><\/p>\n

Investigative historian Eric Zuesse is the author, most recently, of\u00a0 They\u2019re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010<\/i><\/span><\/a>,<\/i> and of<\/span> \u00a0<\/i>CHRIST\u2019S VENTRILOQUISTS: The Event that Created Christianity<\/i><\/span><\/a>.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Eric Zuesse On July 18th, Rob Nichols, the President of the American Bankers\u2019 Association, which is controlled by the mega-banks, struck back against Republican Presidential candidate Donald Trump. Nichols criticized Trump\u2019s insistence to restore the Democratic U.S. President Franklin Delano Roosevelt\u2019s top reform of the U.S. economy, the Glass-Steagall Act, which prevented another taxpayer bailout […]<\/p>\n","protected":false},"author":1254,"featured_media":256288,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[487],"tags":[115,30,32,1035,535,698,59,524,754,523,531,40,1024],"class_list":{"0":"post-256758","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-breaking-news","8":"tag-barack-obama","9":"tag-big-brother","10":"tag-cia","11":"tag-daily-news","12":"tag-global-news","13":"tag-hillary-clinton","14":"tag-military","15":"tag-russia","16":"tag-syria","17":"tag-ukraine","18":"tag-wall-street","19":"tag-white-house","20":"tag-ww3"},"_links":{"self":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/256758","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/users\/1254"}],"replies":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/comments?post=256758"}],"version-history":[{"count":0,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/256758\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media\/256288"}],"wp:attachment":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media?parent=256758"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/categories?post=256758"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/tags?post=256758"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}