By ann summers
Perhaps Donald Trump has proven that it takes a village idiot to triangulate ten garlic bulbs and take puma mountain by strategy. Or despite hip-hop musicals about Alexander Hamilton, will the eventual POTUS think about central banking as part of a revolution rather than continue the same path of GOP obstruction and post-DLC Third-Way centrist dalliances.
The worse aspect of the 2016 campaign is revisionist histories of the actual story about how centrist and neoliberal appeasement and even Democratic party apologists do not drive out or tamp down the Democratic possibility of taking the White House and even Congress. The GOP will collapse from its own obstructionist LIV weight.
No, we’ll have selfies of rolling adolescent front-seat sex in Googletm cars for those who can afford to wear VR goggles, regardless of who wins. And as long as textualism for the Second Amendment is OK for gun ownership in DC, then bringing back Glass-Steagell isn’t that absurd, even for hard-line capitalists. In the age of automatic collision sensors, the automobile selfie-stick will be king.
The chickens will come home to roost in those pots when post-2016, Citizens United never gets overthrown and decades of campaign finance reform lip-service continues unabated, but we’ll have EVs in every garage and every city will continue their Hoovervillian police villainy whether paramilitary misuse of firearms, mysterious deaths, or unlawful incarceration.
Glass-Steagell did occur in a golden age of socialism built on pyrite, and despite a major candidate identifying as such, a revolution recovering the losses since 2007 will succeed in 2016. And a libertarian minarchy is definitely not an answer, despite its attraction to LIVs and miscellaneous cranks who might abolish the Fed and the IRS.
Triangulating – beating up on the ideologues within your own party in order to shore up your centrist cred and reassure your money sources – is an especially brilliant solution for Democrats targeting national office. Those politicians need virtual monopolies on union and minority votes, but also need just enough centrists and white southerners to stay viable. To keep those latter votes, you need to make a few very conspicuous moves from time to time.
Robert Kuttner, Joseph Stiglitz, Elizabeth Warren, Robert Weissman, Richard D. Wolff and others have tied Glass–Steagall repeal to the late-2000s financial crisis.
Kuttner acknowledged “de facto enroads” before Glass–Steagall “repeal” but argued the GLBA’s “repeal” had permitted “super-banks” to “re-enact the same kinds of structural conflicts of interest that were endemic in the 1920s,” which he characterized as “lending to speculators, packaging and securitizing credits and then selling them off, wholesale or retail, and extracting fees at every step along the way.”
Stiglitz argued “the most important consequence of Glass–Steagall repeal” was in changing the culture of commercial banking so that the “bigger risk” culture of investment banking “came out on top.” He also argued the GLBA “created ever larger banks that were too big to be allowed to fail,” which “provided incentives for excessive risk taking.”
Warren explained Glass–Steagall had kept banks from doing “crazy things.” She credited FDIC insurance, the Glass–Steagall separation of investment banking, and SEC regulations as providing “50 years without a crisis” and argued that crises returned in the 1980s with the “pulling away of the threads” of regulation.
Weissman agrees with Stiglitz that the “most important effect” of Glass–Steagall “repeal” was to “change the culture of commercial banking to emulate Wall Street’s high-risk speculative betting approach.”…
While accepting that under Glass–Steagall financial firms could still have “made, sold, and securitized risky mortgages, all the while fueling a massive housing bubble and building a highly leveraged, Ponzi-like pyramid of derivatives on top,” the New Rules Project concludes that commentators who deny the GLBA played a role in the financial crisis “fail to recognize the significance of 1999 as the pivotal policy-making moment leading up to the crash.”
The Project argues 1999 was Congress’s opportunity to reject 25 years of “deregulation” and “confront the changing financial system by reaffirming the importance of effective structural safeguards, such as the Glass–Steagall Act’s firewall and market share caps to limit the size of banks; bringing shadow banks into the regulatory framework; and developing new rules to control the dangers inherent in derivatives and other engineered financial products.”
Raj Date and Michael Konczal similarly argued that the GLBA did not create the financial crisis but that the implicit “logical premises” of the GLBA, which included a belief that “non-depository ‘shadow banks’ should continue to compete in the banking business,” “enabled the financial crisis” and “may well have hastened it.”
It is not a question of “reforming” the US and global banking system. The death grip of the banking elite over the wealth of society must be smashed. The answer to the plundering of society by the financial aristocracy is the expropriation of the bankers, the nationalization of the banks and finance houses, and their transformation into public trusts under the democratic control of the working population.
The alternative to the tyranny of the bankers is socialism, i.e., the abolition of private ownership of the banks and the major industries and the replacement of the capitalist market with rational planning and democratic control, geared to social need, not private profit.
The books of the banks must be opened to public inspection, and all predatory and illegal activities prosecuted. The ill-gotten wealth of the financial elite should be seized and used to meet pressing social needs—health care, education, housing, jobs.
This is a good article. I very much agree that something needs to be done. Picking at Glass Steagall is probably not enough, we need a new act for a new era that goes further.
For awhile there everybody was talking about “too big to fail” needing to be fixed. That thought seems to have faded from memory, and many people haven’t noticed that nothing was ever done.
When I kept track of what happened, I noticed a few instances where rarely some bank or hedge fund trader was fined, but you could track how much was made. They made billions of dollars in profit, and then paid millions in fines.
The analogy I made when I tried to explain it to someone else was this. “Picture that you robbed a bank. You are caught. The police send you home to await trial. After a lengthy trial and a lot of screaming, the decision is made to fine you some of the money in one of the bags of cash which you stole.”
“Do you suppose that bank would be robbed again?”
I feel like we are due for another bubble some time soon.
Ann Summers, Joe Biden is the village idiot. He can’t keep his mouth shut to save his life.