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Forum Post: Glass Steagall fakes in senate

Posted 10 years ago on April 12, 2013, 6:03 p.m. EST by arturo (3169) from Shanghai, Shanghai
This content is user submitted and not an official statement

Two bills claiming to "break up the big banks" and "accomplish the same goal as Glass-Steagall" will shortly be floating in the Senate; neither bill breaks up any banks or bank holding companies, or prevents commercial banks from putting deposit funds into securities and derivatives. Liberal media are giving wall-to-wall coverage to both, along the lines of "it's what's practical", "might pass", etc.

One bill, by Sen. Bernie Sanders (S 685) calls for the biggest banks to be broken up by decision of Obama's Treasury Secretary (that would be Citigroup veteran Jacob Lew), without suggesting how this would be done — in fact, only the bill's title has been filed, with no legislative text; the description of requiring decisions by Lew, comes from a Sanders press release. This is apparently more of a protest resolution than a bill.

For the other, still-forthcoming Brown-Vitter "too-big-to-fail" bill, a detailed draft legislative text has been leaked and circulated by some Senators, which makes clear that it does not break up any financial institutions.

Brown-Vitter will be a bank capital requirements bill, to which will be added a number of elements of the Glass-Steagall Act, for verisimilitude, but without the two central elements: separating commercial banking from securities broker-dealing, etc.; and preventing commercial banks from dealing in securities, derivatives, and insurance.

Judging from the circulating draft, Brown-Vitter:

a) requires five years for its basic provisions to take full effect (!), compared to one year for Kaptur-Jones;

b) will require all banks have a 10% capital ratio of tangible equity / tangible assets including "fair value" of all derivatives and off-balance-sheet entities;

c) will require banks with more than $400 billion in assets have a capital ratio on a sliding scale, greater than 10% but less than 15% tangible equity / tangible assets;

d) will withdraw United States banks from the Basel III agreement on capital standards; BUT, paradoxically,

e) will allow U.S. regulators to design their own "risk-weighted capital standard" — exactly what is most objectionable about Basel because it favors the biggest bank holding companies which use computer risk-models and derivatives trades to make their assets go away for capital purposes (smaller denominator = higher capital ratio in b) above);

f) will prohibit bank holding companies from making transfers of securities between investment affiliates and the commercial bank (a Glass-Steagall-like provision);

g) will prohibit bank holding companies or commercial bank units from making loans, purchases of securities, repo agreements, or derivatives contracts with non-bank affiliates (a strongly Glass-Steagall-like element).

h) will prohibit government assistance/insurance to non-banks (another strongly Glass-Steagall-like element);

i) will specifically permit commercial banks and their holding companies to operate insurance affiliates.

8 Comments

8 Comments


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[-] 1 points by Builder (4202) 10 years ago

It's all piss in the wind.

If the govt tells the plebs that their deposits are now uninsured by the govt, that would give a clear and concise message to the bankster casino boys that their days are numbered.

[-] -2 points by OTP (-203) from Tampa, FL 10 years ago

fair value in the derivatives market would be an interesting chore to figure out.

[-] 1 points by arturo (3169) from Shanghai, Shanghai 10 years ago

I suppose so. In some cases, I think the answer would be "next to nothing".

By the way, I see by your score (-330) that your views must be considered "controversial" here. I'm not trying to make a judgement one way or the other, but am curious as to why that is. Are you critical of the political left or is it something else?

[-] 1 points by OTP (-203) from Tampa, FL 10 years ago

Apparently when occupy was going on I missed the entire point of everything :)

[-] 1 points by Builder (4202) 10 years ago

LOL, the stinkle-fingerer was busy today.

[-] 0 points by OTP (-203) from Tampa, FL 10 years ago

I agree. Please join in the fun.

[-] 1 points by Builder (4202) 10 years ago

He came; he saw; he stinkled.

That's inclusion for ya.

[-] 0 points by frovikleka (2563) from Island Heights, NJ 10 years ago

This goes back to several months before the election when we had partisan moderators running the show unbeknownst to the good people who set this site up

They were joined by people of conscience, and political hacks with multiple pseudonyms, and some even with different personalities

And the purpose was and still is to co-opt this movement into the dem party

Anyway from my experence in my 50 plus trips, over the last 18 mos. to NYC in support of OTS and OWS protests and events, I would say that with a few notable exceptions (bw & shadz right at the top of the list) the people with the really high point totals are not representative of the OWS that I know

I hope that clarifies it for you

~Odin~