Saturday, January 19, 2013

Latest from LaRouche

This article appears in the January 18, 2013 issue [1] of Executive Intelligence Review.[2]

2013: The Year of Glass-Steagall

Jan. 10—As 2013 begins, humanity faces the worst economic breakdown crisis that the planet has seen since the 14th-Century New Dark Age. The mega-bailouts of the predatory banks and of the international speculative financial bubble, which began in earnest in 2008, and continue in crescendo up to the present, have only unleashed a hyperinflationary explosion in the entire trans-Atlantic sector, along with cutbacks and austerity imposed in Europe by the hated Troika, which are extinguishing the very existence of nations—as is seen clearly and painfully in the cases of Greece, Portugal, Spain, and others. If not stopped, these policies will only worsen the crisis, bringing Greek-like conditions to the United States and elsewhere.
All sensible and moral people admit that the current policies are a disaster, and that we cannot continue along the current path. But almost no one has any idea of the solution, of a rigorous program to solve the problem at its root.
In this anguishing situation, a growing international movement has fortunately emerged in favor of the adoption in all countries of the Glass-Steagall law,[4] which President Franklin D. Roosevelt established in the United States in 1933, and which imposes an absolute separation between commercial banking, which issues productive loans, and investment banking, which speculates with private and public funds alike. Initiated by American economist and statesman Lyndon LaRouche, the international calls for Glass-Steagall have spread from the United States, to Russia, to the United Kingdom, to the majority of countries of continental Europe, and to numerous nations in the developing sector, as we document in the attached memorandum and documentation.
Of particular importance is the fact that, on Jan. 3, 2013, the very day that the 113th Congress of the United States was sworn in, Rep. Marcy Kaptur (D-Ohio), and Rep. Walter Jones (R-N.C.), formally introduced to the House of Representatives H.R. 129[5], a bill which calls for the re-establishment of the Glass-Steagall law. Kaptur had introduced an identical bill, H.R. 1489[6], in the 112th Congress, which was sponsored by a total of 85 Congressmen, both Democrats and Republicans, although it was never brought to the floor for a vote. With the introduction of H.R. 129, the issue of Glass-Stegall has been placed front and center in the national and international debate.
LaRouche has established that the adoption of Glass-Steagall, both in the United States and internationally, is the essential first step to save the international economy from a systemic breakdown. But although it is necessary to immediately implement Glass-Steagall in order to stop the bloodletting, additional measures are required to reactivate the productive economy and create productive employment. In the case of the United States, it is essential to return to a Hamiltonian credit system, with a National Bank that issues new productive credit (see EIR, Dec. 14, 2012[7]); and great scientific and infrastructure projects must be set in motion, such as the North American Water and Power Alliance (NAWAPA XXI)[8]. These three programmatic points must go together to provide a solution to the current systemic crisis.
In Europe, in addition to Glass-Steagall, it is necessary to:
  1. Revoke the Maastricht, Lisbon, and related EU treaties, which have only served to impose the British Empire's supranational dictatorship;
  2. Leave the euro system and re-establish sovereign national currencies;
  3. Protect those currencies with exchange and capital controls;
  4. Establish in each nation a Credit System with its attendant National Bank, in the tradition of Alexander Hamilton, to issue long-term, low-interest credit for productive investment, especially in infrastructure;
  5. Re-establish a system of fixed exchange rates among nations, as existed under the original Bretton Woods system, in order to stop speculation and foster legitimate international trade and foreign investment;
  6. As stated by the document, "Appeal to Governments and Parliaments for Glass-Steagall Now![9]" initiated in June 2012 by Helga Zepp-LaRouche, president of Germany's Civil Rights Solidarity Movement (BüSo), and Jacques Cheminade, former French Presidential candidate and head of the Solidarité et Progrès party:
"The reconstruction of the real economy should be facilitated through long-term treaties of cooperation between sovereign nation-states, which would launch well-defined infrastructure and development projects in the context of the Mediterranean plan for an Economic Miracle[10], seen as a necessary extension of the Eurasian Land-Bridge. These contracts represent a de facto new credit system, a New Bretton Woods system, in the tradition of Franklin D. Roosevelt."
In the case of developing-sector countries, in addition to Glass-Steagall, additional steps are required which are similar to those mentioned above for Europe, with the exception of 1 and 2.
If you want to have a future for yourself, your children, and your nation, make sure that 2013 is the Year of Glass-Steagall.

FDIC Vice-Chair Thomas Hoenig: Remove the Safety Net from Non-bank Activities, Return to Glass-Steagall Framework

January 17th, 2013 • 6:56 PM

Thomas M. Hoenig.
Thomas M. Hoenig, Vice-Chairman of the Federal Deposit Insurance Corporation, urged that the problem of "too big to fail" banks be solved by removing the "safety net" of Federal insurance from non-bank activities, since without it, the largest banks will shrink drastically, as investors demand that these banks hold stronger assets, in an article today in American Banker newsletter.
Hoenig writes, "For decades the principle of limited subsidy was understood and practiced. The Glass-Steagall Act kept commercial banks and the government safety net separate from investment banking and broker-dealer activities. Just as importantly, investment banks were kept separate from the payments system and from funding their activities with insured deposits." This system served the United States from the Great Depression until 1999, when the passage of Gramm-Leach-Bliley Act officially ended the separation of activities, Hoenig writes.
There have been calls to break up the largest banks, and place the non-bank broker-dealer activities in separate companies to compete for public investment. Would they remain "too big to fail" if that were done? Hoenig answers, "The short answer is no. Structured correctly and without a government backstop, the market would demand stronger capital and safer asset growth. This in turn would enhance the ability to place them into bankruptcy instead of the arms of the taxpayer, should they run into trouble."
The safety net is essential to meeting the liquidity demands of the payments and clearing system, Hoenig explains. But, it creates a "moral hazard," because creditors worry less about getting their money back, and a firm's financial condition—a problem which intensifies as firms become larger, and add other activities which enjoy the safety net: "Subsidizing noncore banking activities such as underwriting, proprietary trading, market making, and derivatives encourages firms to bring these business lines onto their balance sheets using more debt, most of which is very short term. The effect is to make the financial system increasingly fragile, and it it becomes proportionately more difficult to allow these firms to fail."
"Thus, to realistically address the problem of too-big-to-fail, these activities must again be separated. Commercial banking companies should be confined to operating the payments system and engaging in lending and traditional activities that follow from this basic role...At the same time, placing broker-dealer activities outside of the safety net will reduce the direct risk to the taxpayer and lower the multibillion dollar subsidy that economists now estimate these activities currently enjoy," writes Hoenig. All other activities may continue by broker-dealers, but firms that run into trouble would be much more likely to be resolved through bankruptcy, without a big impact on the economy, as when Drexel-Burnham failed in 1990.
American Banker is a New York-based daily trade newspaper covering the financial services industry, with 50 reporters in 6 cities. It is published in print 4 days a week, and online only on Friday. Its website receives 560,000 hits per month.

Dallas Fed President Richard Fisher Calls for End to Bailout of "Shadow Banking"

January 18th, 2013 • 9:07 AM
In a speech delivered January 16 in Washington, D.C., Dallas Federal Reserve President Richard W. Fisher called for an end to the protection of banks which are "Too Big to Fail" (TBTF), and offered what his office is calling a "common sense approach" to banking reform. His proposal is for a kind of bank separation embodied under Glass-Steagall, although he did not call for it by name:
"Only the resulting downsized commercial banking operations — and not shadow banking affiliates or the parent company — would benefit from the safety net of federal deposit insurance and access to the Federal Reserve's discount window."
Fisher went so far as to propose that, "To reinforce the statute and its credibility, every customer, creditor and counterparty of every shadow banking affiliate and of the senior holding company would be required to agree to and sign a new covenant, a simple disclosure statement that acknowledges their unprotected status."
He even presented a sample disclosure statement, like a health warning on a cigarette package, which would warn that investment and other speculative banking activities were entirely at the risk of the individual investor — not the government.
"WARNING: Conducting business with this affiliate of the ____________ bank holding company carries NO federal deposit insurance or other federal government protection or guarantees. I,____________, fully understand that in conducting business with ____________ banking affiliate, I have NO federal deposit insurance or other federal government protection or guarantees, and my investment is totally at risk."
As has been the case in several previous speeches, Fisher's attacks on the unending bailout approach, adopted following the September 2008 crash of Lehman Brothers and the near-meltdown of the system, include a relatively sharp analysis of the problems with the ongoing policy, as introduced by Ben Bernanke during the administration of Bush, Jr., and extended by the Obama Administration; and Fisher includes an accurate critique of the Dodd-Frank legislation, which he describes as counterproductive, working against the core problem it seeks to address.
In opening his speech, given before the Committee for the Republic, Fisher denounced "the injustice of being held hostage to large financial institutions considered 'too big to fail'...." He added, referring to their "privileged" status, that these institutions "exact an unfair tax upon the American people. Moreover, they interfere with the transmission of monetary policy and inhibit the advancement of our nation's economic prosperity."
The bulk of his presentation was an elaboration of both what he calls the "pathology of TBTF," and how Dodd-Frank "has made things worse, not better." These TBTF institutions became the "enablers of a financial tsunami," and they and their related shadow banking system have been protected, he correctly argues, but the protection of them, through "accomodative monetary policy" and has "brought economic growth to a standstill and spread their sickness to the rest of the banking system."
Further, Fisher quoted extensively from Bank of England Glass-Steagall proponent Andrew Haldane, on how Dodd-Frank regulation makes things worse.

Active Support of Glass-Steagall in the Media

January 18th, 2013 • 9:12 AM
Expositions on the importance of the original Glass-Steagall, the disaster of its repeal, and the need to re-institute it, are beginning to intensify in the media. Several leading examples are:
* A letter to the editor from LaRouche movement organizer Andy Olson was published in Thursday's Daily Globe of Worthington, Minn., under the title "Letter: Reinstate Glass-Steagall legislation." Olson's letter begins, "Wall Street apologist Sen. Amy Klobuchar's justification for her 100-percent voting record for bailouts of Wall Street's gambling debts is regularly defended ..." After describing Sen. Klobuchar's excuses, and referencing a Rolling Stone article on the fraud of the bailout, Olson concludes, "The only remedy that will work is a new bill, H.R. 129, to reinstate Glass-Steagall that was just reintroduced in the 113th Congress. Amy, you and all your bailout apologists are now faced with a choice: Wall Street or the American people."
* An article dated January 16 in the Capital Times of Madison, Wisc. by associate editor John Nichols, says newly-elected Sen.Tammy "Baldwin should challenge Obama's Treasury pick." Despite Obama's support of her election, Baldwin should join progressives in asking Jack Lew about the 1999 repeal of Glass-Steagall. One question refers to Sen. Paul Wellstone's concerns at the time about undermining Glass-Steagall with the preceding passage of other financial deregulation laws, and says Baldwin should ask whether Lew, as Clinton's OMB head, had shared those concerns. The second question first cites Sen. Byron Dorgan's remarks during the 1999 Glass-Steagall debate: "I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past, and that that which was true in the 1930s is true in 2010." Nichols says Sen. Baldwin should ask Lew, "In hindsight, considering the banking meltdown, do you think that Dorgan might have been on to something?"
* An article by former Asst. Undersec. of the Treasury Paul Craig Roberts, dated January 17, was published on the website American Free Press. In the article, which is an attack on the "fiscal cliff" debate as a "diversion" from the real economic issues, Roberts says, "Prior to financial deregulation, essentially the repeal of the Glass-Steagall Act and the non-regulation of derivatives ... commercial banks "took depositors' deposits and made loans to businesses and consumers and purchased Treasury bonds with any extra reserves. With the repeal of Glass-Steagall these honest commercial banks became gambling casinos ... [Their] bets soon exceeded many times not only U.S. gross domestic product (GDP) but world GDP. Indeed, the gambling bets of JPMorgan Chase Bank alone are equal to world GDP."
* A Jan. 16 article on the website of The National Interest, "Will Banks Finally Be Brought To Heel," by John Quiggan, a professor in Australia and at the University of Maryland, describes the outrages and crimes committed by UBS and HSBC, and says it's true that prosecuting them or shutting them down "would bring an end to the financial system as we know it today. To bring the system back under control it would be necessary to break up the big global banks, and in particular to separate retail and investment banking. But this would do no more than restore the situation that prevailed before the financial deregulation policies of the 1980s and 1990s, policies that have produced nothing but disaster."
 2013 -- S 0010
S T A T E   O F   R H O D E   I S L A N D

S E N A T E   R E S O L U T I O N
Introduced By: Senators DiPalma, Ruggerio, Ciccone, Goodwin, and Sheehan
Date Introduced: January 16, 2013
Referred To: Senate Corporations
WHEREAS, An effective monetary and banking system is essential to the proper function of the economy; and
WHEREAS, An effective monetary and banking system must function in the public interest without bias; and
WHEREAS, The Federal Banking Act of 1933, commonly referred to as the Glass- Steagall Act, protected the public interest in matters dealing with the regulation of commercial and investment banking, in addition to insurance companies and securities firms; and
WHEREAS, The Glass-Steagall Act was repealed in 1999, permitting members of the financial industry to exploit the financial system for their own gain in disregard of the public interest; and
WHEREAS, Many of the financial industry entities were saved by the United States treasury at a cost of billions of dollars to American taxpayers; and
WHEREAS, Within the hundreds of pages of the Dodd-Frank Wall Street Reform Act, there are no prohibitions preventing "too big to fail" financial services organizations from investing in or undertaking substantial risks in trillions of dollars of derivative contracts; and
WHEREAS, The American taxpayers continue to be at risk for the next round of bank failures with enormous risks undertaken by financial services conglomerates; and
WHEREAS, Congresswoman Marcy Kaptur has introduced H.R. 1489, known as the Return to Prudent Banking Act of 2011, to reinstate the provisions of the Glass-Steagall Act; and
WHEREAS, H.R. 1489 has 78 co-sponsors in the 112th 1 Congress; and
WHEREAS, The Building and Construction Trades of Rhode Island and Plumbers and Pipefitters Local 51 have adopted resolutions asking Congress to enact H.R. 1489; and
WHEREAS, Glass-Steagall has received wide support nationally, from the AFL-CIO, the American Federation of Teachers, and the International Association of Machinists, and from prominent economic and business leaders, including Thomas Hoenig of FDIC, Sanford Weill, former CEO of Citibank, economist Luigi Zingales, the New York Times, the St. Louis Post Dispatch, the LA Times, and many others; now, therefore be it
RESOLVED, That this Senate of the State of Rhode Island and Providence Plantations hereby strongly urges the United States Congress to enact H.R. 1489, pending before the 112th Congress, to reinstate the restrictions of the Banking Act of 1933, commonly referred to as the Glass-Steagall Act, which prohibited commercial banks and bank holding companies from investing in stocks, underwriting securities, or investing in or acting as guarantors in derivative transactions, in order to prevent American taxpayers from again being called upon to fund hundreds of billions of dollars to bail out financial institutions; and be it further
RESOLVED, That the Secretary of State be and he hereby is authorized and directed to transmit duly certified copies of this resolution to the President of the United States, the Senate Majority Leader, the Speaker of the United States House of Representatives, Congressional delegates of each state in the United States of America, and each member of Rhode Island's Congressional Delegation.

Congress is in Session; Call their offices
and meet your Congressmen
to Co-sponsor H.R. 129!

U.S. Rep. Marcy Kaptur.

U.S. Rep. Walter Jones.
Dear Congressman,
I am writing to you to request that you add your name as a co-sponsor to H.R. 129, the bill to re-instate the Glass-Steagall law. H.R. 129 is the replacement in the new Congress for H.R.1489, which was introduced last spring by Congresswoman Marcy Kaptur (D-Ohio) and has Republican and Democratic co-sponsors. Glass-Steagall was law for 66 years until its repeal in 1999. Since then, the country has gone into an ever increasing financial spiral, which collapsed in 2007 and 2008, and a new spiral now ruining the nation. The bailouts to Wall Street have totaled $27 trillion or more according to reports from Neal Barofsky, former In spector General of TARP, and have been used to prop up countless hundreds of trillions in derivatives and other Monopoly money paper. Re-imposition of Glass-Steagall will end this monetarist madness once and for all, and return the nation to a credit system. Under our traditional credit system, the government can issue credit to states to rehire unemployed, but urgently needed municipal workers, such as firemen, policemen, teachers, sanitation and others. 
We can immediately follow this,  as was done to end the Great Depression in the 1930s,  by emitting  federal credit into the private sector and the states to launch urgently needed projects to reconstitute our national rail/power/water grid, creating millions of jobs in the process.  I urge you to become a co-sponsor of HR 129. Please communicate your intentions on this to me as soon as possible.   I enclose the Dear Colleague letter from Congresswoman Kaptur for your study. 
Stu Rosenblatt 

Reinstate Glass-Steagall
Cosponsor H.R. 1489 (now H.R. 129),
“The Return to Prudent Banking Act”

Dear Colleague:
I am writing to request your support for H.R. 1489, “The Return to Prudent Banking Act.”  I recently reintroduced this legislation to strengthen our financial system by reinstating Glass-Steagall. 
In response to the failure of thousands of banks across the country, Congress enacted the Banking Act of 1933, commonly known as Glass-Steagall, during the height of the Great Depression.  This statute safeguarded the American economy for decades by legally separating commercial and investment banking.  Such a common sense system provided greater security to banking deposits in commercial banks.  Additionally, investment banks were only able to leverage their own funds, limiting the systemic risks of the American citizenry.  For decades, Glass-Steagall was a cornerstone of the U.S. financial system, until the Gramm Leach Bliley Act unwisely completely ended this important financial regulation in 1999.
With the repeal of the Glass-Steagall Act over a decade ago, the U.S. economy was exposed to an intolerable level of risk, and the recent financial crisis was certainly exacerbated by the removal of these safeguards.  I believe that we must limit the potential for future economic collapses by returning to a more prudent banking system in which banks must once again choose between investment activities or commercial lending.  If you would like more information or would like to become a co-sponsor of H.R. 1489, please contact John Brodtke in my office at
Member of Congress 

H.R. 129 Now has 4 co-sponsors.
Call your Representative to urge him or her
to sign H.R. 129;  202-224-3121

Current List of Congressional Co-Sponsors to Marcy Kaptur's H.R. 129. (By date of signing)
  1. (init.) Rep Kaptur, Marcy [OH-9] (introduced 1/3/2013)
  2. Rep Jones, Walter B., Jr. [NC-3] - 1/3/2013
  3. Rep Michaud, Michael H. [ME-2] - 1/14/2013
  4. Rep McGovern, James P. [MA-2] - 1/15/2013
List of Congressional Co-Sponsors to Marcy Kaptur's H.R. 1489 when it expired with the adjournment of the 112th Congress on Jan. 3, 2013. (By date of signing)
  1. (init.) Marcy Kaptur (D - OH)
  2. James Moran (D-VA)
  3. Walter Jones (R-NC)
  4. John Conyers (D-MI), former Chair, current ranking member House Judiciary Committee, dean of Black Caucus
  5. Jesse Jackson Jr. (D-IL)
  6. Lynn Woolsey (D-CA), former Co-Chair Progressive Caucus
  7. Jim McDermott (D-WA)
  8. Louise McIntosh Slaughter (D-NY), ranking member House Committee on Rules
  9. Edolphus Towns (D-NY), former Chairman of the House Oversight and Government Reform Committee
  10. Maxine Waters (D-CA), former Chair of the Congressional Black Caucus
  11. Marcia Fudge (D-OH)
  12. Kurt Schrader (D-OR)
  13. Danny Davis (D-IL)
  14. Roscoe Bartlett (R-MD)
  15. John Garamendi (D-CA)
  16. Dennis Kucinich (D-OH)
  17. Peter Visclosky (D-IN)
  18. Jan Shakowsky (D-IL)
  19. Barbara Lee (D-Ca), former Chair Congressional Black Caucus, former Co-Chair of the Progressive Caucus
  20. Mike Coffman (R-CO)
  21. George Miller (D-CA), former Chair, current ranking member Education and the Workforce Committee
  22. Hansen Clarke (D-MI)
  23. Fortney Pete Stark (D-Ca)
  24. Michael Capuano (D-MA), ranking member U.S. House financial services Subcommittee on Oversight and Investigations
  25. Rep. Charles Rangel (D-NY), former Chairman of the United States House Committee on Ways and Means
  26. Rodney Alexander (R-LA)
  27. Raul Grijalva (D-AZ), the Co-Chair of the Progressive Caucus
  28. Daniel Lipinski (D-IL)
  29. John F. Tierney (D-MA)
  30. Donna Christensen (D-VI)
  31. Al Green (D-TX)
  32. Bob Filner (D-CA)
  33. Tammy Baldwin(D-WI)
  34. Peter Welch (D-VT)
  35. John Olver (D-MA)
  36. Larry Kissel (D-NC)
  37. Yvette D. Clarke (D-NY)
  38. Chellie Pingree (D-ME)
  39. Michael H. Michaud (D-ME)
  40. Henry C. "Hank" Johnson(D-GA)
  41. Zoe Lofgren (D-CA)
  42. Peter DeFazio (D-OR)
  43. Keith Ellison (D-MN)
  44. Rosa DeLauro (D-CT), House Democratic Steering and Policy Committee (Co-Chair for Steering)
  45. Wm. Lacy Clay (D-MO)
  46. Bennie G. Thompson (D-MS), ranking member Committee on Homeland Security
  47. Loretta Sanchez (D-CA)
  48. John Lewis (D-GA)
  49. Tim Ryan (D-OH)
  50. Collin Peterson (D-MN), ranking member of the Agriculture Committee
  51. David Cicilline (D-RI)
  52. Betty Sutton (D-OH)
  53. Sheila Jackson Lee (D-TX)
  54. Donald M. Payne (D-NJ) (* deceased)
  55. Frederica Wilson (D-FL)
  56. Frank Pallone, Jr. (D-NJ)
  57. John A. Yarmuth (D-KY)
  58. Michael F. Doyle, (D-PA)
  59. Susan Davis (D-CA)
  60. Dale Kildee (D-MI)
  61. Edward J. Markey (D-MA)
  62. Karen Bass (D-CA)
  63. Eddie Bernice Johnson (D-TX)
  64. Gene Green (D-TX)
  65. Judy Chu (D-CA)
  66. James McGovern (D-MA)
  67. Paul Tonko (D-NY)
  68. Mazie Hirono (D-HI)
  69. Donna Edwards (D-MD)
  70. Eni F.H. Faleomavaega (D-AS)
  71. Silvestre Reyes (D-TX)
  72. Jackie Speier (D-CA)
  73. Bob Brady (D-PA)
  74. Eleanor Holmes Norton (D-DC)
  75. Maurice Hinchey (D-NY)
  76. Tim Holden (D-PA)
  77. Gregorio Sablan (D-MP)
  78. Earl Blumenauer (D-OR)
  79. Steven Rothman (D-NJ)
  80. Janice Hahn (D-CA)
  81. Elijah Cummings (D-MD)
  82. Luis Gutierrez (D-IL)
  83. Lloyd Doggett (D-TX)
  84. Lucille Roybal-Allard (D-CA)
  85. Eshoo, Anna G. (CA)

Bill Summary & Status
113th Congress (2013 - 2014)
All Information , under "Enter Search", select "Bill Number" from the drop-down list and enter "H.R.129" in the text field.

Latest Title: To repeal certain provisions of the Gramm-Leach-Bliley Act and revive the separation between commercial banking and the securities business, in the manner provided in the Banking Act of 1933, the so-called "Glass-Steagall Act", and for other purposes.
Sponsor: Rep Kaptur, Marcy [OH-9] (introduced 1/3/2013)      Cosponsors (3)
Latest Major Action: 1/3/2013 Referred to House committee. Status: Referred to the House Committee on Financial Services.



1/3/2013: Referred to the House Committee on Financial Services.

To repeal certain provisions of the Gramm-Leach-Bliley Act and revive the separation between commercial banking and the securities business, in the manner provided in the Banking Act of 1933, the so-called "Glass-Steagall Act", and for other purposes.

Rep Jones, Walter B., Jr. [NC-3] - 1/3/2013
Rep Michaud, Michael H. [ME-2] - 1/14/2013
Rep McGovern, James P. [MA-2] - 1/15/2013

Committee/Subcommittee: Activity:
House Financial Services Referral, In Committee


No comments:

Post a Comment