Tag Archives: taxpayers

McCain and Cantwell Want a New Glass-Steagall Law | Newsweek Voices – Michael Hirsh | Newsweek.com

The blinding complexity and interconnections created by modern capital markets—especially because of the way nearly half a trillion dollars in derivatives trades linked the firms to each other—demanded that there be strong firewalls and capital buffers between Wall Street institutions and their affiliates, and between banks and nonbanks and insurance companies. Otherwise there would be no islands of safety—no healthy institutions left to come and rescue the day, as commercial banks traditionally had done since the days of J. P. Morgans famous bailout in 1907. The repeal of Glass-Steagall took things in precisely the opposite direction, eliminating most of the firewalls and inviting staid commercial banks into the buccaneering world of Wall Street trading. Representative Hinchey says it “was a recipe for disaster because these banks were empowered to make large bets with depositors money, and money they didnt really have. When many of those bets, particularly in the housing sector, didnt pan out, the whole deck of cards came crumbling down and U.S. taxpayers had to come to the rescue.”Today the walls between firms still seem low indeed, and trading in derivatives that are “over the counter” that is, out of public sight continues at an astonishing pace, having risen back up to nearly $600 trillion worth. One big danger sign ahead is that the biggest banks have gotten even bigger in the aftermath of the catastrophe, and under the new rules requiring swap dealers to post capital for margin requirements, the big banks are likely to monopolize even more of this derivatives market and become that much richer and more powerful.

via McCain and Cantwell Want a New Glass-Steagall Law | Newsweek Voices – Michael Hirsh | Newsweek.com.

via McCain and Cantwell Want a New Glass-Steagall Law | Newsweek Voices – Michael Hirsh | Newsweek.com.

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Robert Creamer: Pass Financial Regulatory Reform – Then Break Up the Big Wall Street Banks

Last Friday, the House passed critical regulatory reform legislation aimed at preventing the recurrence of the kind of financial meltdown that devastated our economy at the end of the Bush administration.

The lobbyists from Wall Street worked hand-in-glove with the Republicans, and a few Democrats, to try to kill the bill. Astoundingly, the Republicans argued that Wall Street should continue to be free to engage in the same reckless speculation that led directly to 10 percent unemployment and required the taxpayers to inject hundreds of billions into the markets so that the geniuses of private finance would not plunge us all into the abyss of another Great Depression.

With no regard for history — and here I mean the events of only 12 months ago — the Republicans and Big Banks have the audacity to contend that the creation of jobs and a growing economy requires the lowest levels of regulation and government involvement possible.

Here’s a news flash: we tried it your way for eight years. The results: the lowest level of job creation of any eight-year period since World War II; all of the country’s economic growth was siphoned off by the top 2 percent of the population and the financial sector; and the economy imploded. Sure — let’s try that again.

The Republicans even had the brazenness to convene a convocation of 100 Wall Street lobbyists last Wednesday to plot how they could completely kill financial regulatory reform. They failed, largely due to the great work of Americans for Regulatory Reform, House Speaker Pelosi, Finance Chair Barney Frank and intensive lobbying from the Obama administration.

via Robert Creamer: Pass Financial Regulatory Reform – Then Break Up the Big Wall Street Banks.

via Robert Creamer: Pass Financial Regulatory Reform – Then Break Up the Big Wall Street Banks.