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Democratic Senator Elizabeth Warren, Republican counterpart John McCain and two others have...

Democratic Senator Elizabeth Warren, Republican counterpart John McCain and two others have introduced the "21st Century Glass-Steagall Act," a reprise of the 1930s law that was repealed in 1999 and that separated traditional banking such as home loans and checking accounts from riskier pursuits like investment banking and trading derivatives. Slogans such as "banking should be boring" and keep "keep the gamblers out of our banks" have a populist ring, but the legislation will face many hurdles.
Comments (74)
  • MexCom
    , contributor
    Comments (3051) | Send Message
     
    What a combination, a pea brained idiot and a wimp. She also wants to give students the incentive to borrow excessive amounts of money to buy cars, tv sets for their dorm rooms and Florida break vacations. This is only a ploy from this demagogue to gather political support ($) from her Massachusetts constituents and it will certainly fail if it ever comes to a vote. Just another example of our do nothing Congress.
    12 Jul 2013, 05:19 AM Reply Like
  • Jake2992
    , contributor
    Comments (831) | Send Message
     
    Another example of a know nothing internet troll.
    12 Jul 2013, 08:11 AM Reply Like
  • mickmars
    , contributor
    Comments (1323) | Send Message
     
    The Genie is out of the bottle. They'll never put it back. We may get some gutted version of Glass-Steagall, but it won't prevent the ongoing silent theft of wealth from hard-working Americans.

     

    TBTF Banks own these politicians now.
    12 Jul 2013, 08:21 AM Reply Like
  • Topcat
    , contributor
    Comments (423) | Send Message
     
    no kidding..add useful comment for an investment forum or please leave
    12 Jul 2013, 12:42 PM Reply Like
  • Joe Dokes
    , contributor
    Comments (2) | Send Message
     
    Good for her. The majority of the American people understand that this is overdue, and it is only a corrupt Congress that is failing to help this country. In addition, a growing number of business people - especially those at small, innovative companies that are our future - are sick of the crony/casino economy, which produces nothing.except sweetheart deals for the connected - just like a third world country. This country will not stay strong unless it brings the financial sector to heal.

     

    http://bit.ly/13EZVXH
    12 Jul 2013, 05:31 AM Reply Like
  • june1234
    , contributor
    Comments (2599) | Send Message
     
    No kidding. Glass Steagall was passed to prevent banking speculation caused great depression and 08. Expect banking lobbyists to shut it down. Pays to lobby
    12 Jul 2013, 06:33 AM Reply Like
  • consultnick
    , contributor
    Comments (190) | Send Message
     
    A period of "stock punishment" will follow, as grandstanding politicos take swings at the pinata.
    12 Jul 2013, 05:44 AM Reply Like
  • consultnick
    , contributor
    Comments (190) | Send Message
     
    A period of "stock punishment" will follow, as politicos flog the banking pinata. Will make an excellent buying opportunity, as the banks are in the pockets of the politicians, whose heads will move up and down to the music, but who will do nothing to harm the hands feeding them.
    12 Jul 2013, 05:47 AM Reply Like
  • User 7662701
    , contributor
    Comment (1) | Send Message
     
    The megabanks are too big to fail without large consequences to the American economy. It's time to re-disconnect the "well connected" to the nation's pocketbook. Corruption is no longer acceptable. Campaign contributions and tax breaks are simply forms of bribery. Megabanks are monopolies that, in the name of Teddy Roosevelt, need to be trust busted, AGAIN. History repeats.
    Ideally, all corporations should pay off the shareholders, and be given to their ceo's and workers. This would double their pay, increase productivity and reduce the executive pay to something like 40 times the average worker instead of 260.
    12 Jul 2013, 06:14 AM Reply Like
  • gwynfryn
    , contributor
    Comments (4233) | Send Message
     
    Nice idea, but what makes you think it'd reduce executive salaries? Only taking the decisions altogether out of executives' hands is likely to do that! Why 40 X anyway; De Gaule suggested 5 X, which looks like ample differentiation to me...
    12 Jul 2013, 08:23 AM Reply Like
  • WisPokerGuy
    , contributor
    Comments (850) | Send Message
     
    This is about as relevant as a tree falling in an empty forest. Who cares? The politicians in this country can't agree on the order of the line to use the bathroom, therefore this nonsense has ZERO chance of ever passing. DOA
    12 Jul 2013, 06:34 AM Reply Like
  • spinrbait
    , contributor
    Comments (351) | Send Message
     
    you just can't find anywhere to get away from the obamabots, who go everywhere spouting their thinking points. do they actually think they know what they are talking about? or do they realize they actually have no clue?
    they must google every topic they want to bombard each day, to find discussions on the obamabot thinking point of the day.
    we get it already. banks and republicans are mean. obama is the messiah. you can go back to huffington post now
    12 Jul 2013, 06:50 AM Reply Like
  • mickmars
    , contributor
    Comments (1323) | Send Message
     
    Romney woulda fixed everything, right?
    12 Jul 2013, 08:22 AM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2380) | Send Message
     
    mickmars

     

    we will never know about Romney however we do know Mr O's girl (EW) is causing more problems while looking into her native American heritage.
    12 Jul 2013, 08:46 AM Reply Like
  • orangutan
    , contributor
    Comments (221) | Send Message
     
    I guess you can't see the reality that Warren and Obama have very little in common. Obama sides with the banksters.
    12 Jul 2013, 09:21 AM Reply Like
  • WisPokerGuy
    , contributor
    Comments (850) | Send Message
     
    The comment by #spinbait has nothing at all to do with the subject. You want to flame political silliness? Find another blog. The financial relevance is that we live in a country where no regulation of this type has the slightest chance of ever passing. That can be a good thing or a bad thing depending upon your political leanings. However, my comment was only meant to state that this information should be ignored and you shouldn't allow it to influence your investment decisions.

     

    I just had to respond because I hate it when I'm lumped into some political viewpoint by some post I make. I don't want to be lumped in with either of the political parties. A pox on both their houses, I say.

     

    12 Jul 2013, 09:27 AM Reply Like
  • mickmars
    , contributor
    Comments (1323) | Send Message
     
    Yes, we do know Romney would have been no different than Obama when it comes to handling the banks.

     

    http://bit.ly/12wcltt

     

    If you're a conservative, turn off the Hannity and do some research. This is all bigger than Repub/Dem now....
    12 Jul 2013, 09:37 AM Reply Like
  • verobean404
    , contributor
    Comment (1) | Send Message
     
    yes
    12 Jul 2013, 12:21 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2380) | Send Message
     
    MICKMARS

     

    open secrets.org gives you only half the story
    example:
    The organizations themselves did not donate , rather the money came from the organizations' PACs, their individual members or employees or owners, and those individuals' immediate families.
    JPMorgan Chase & Co $834,096
    who made these contributions to Romney.

     

    basically they told you nothing.

     

    Like Jamie Dimon Of Chase, I'm also a democrat. I do a lot
    of research and have become wealthy because of it.
    Not bad for a kid with only a high school piece of paper.

     

    I was against the repeal of Glass-Steagall Act.
    If these idiots in Wash,DC would just cut and paste the original
    we would be ten steps ahead.

     

    Your Comment
    Lloyd was just doing God's work. All that casino wealth accumulation is gonna trickle down to the rest of us soon

     

    If it hasn't dropped down to you your research is flawed.
    12 Jul 2013, 01:38 PM Reply Like
  • mickmars
    , contributor
    Comments (1323) | Send Message
     
    Sorry, bit confused. You don't like "Mr. O's" Elizabeth Warren calling for new Glass-Steagall? But you're a democrat, and you want Glass-Steagall reinstated?

     

    I guess Obama and Romney got big donations from TBTF bank execs for their stance on endangered snail protection, or something.
    12 Jul 2013, 07:42 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2380) | Send Message
     
    mickmars

     

    I will try not to confuse you but try to THINK QUICK.
    Why do we need a "New" GS when you can cut and paste the old
    back into legislation.
    E Warren has no clue about how banks run just like the general public, you can tell by her questions when you worked in the industry for 35+ years.
    first I'm a blue dog democrat(look up the term)
    second read about Ed Koch who was mayor of NYC
    third Mr O. is from Illinois where most democratic politician end in jail(see former Governors of that state)
    fourth Elizabeth Warren is from Massachusetts where you word is only good for 60 seconds.(see All the KENNEDY"S starting with Jack's father, see ALSO Kopechne and "swiftboat Kerry")

     

    I bet you don't know that the mortgage crisis if you go back far enough can be traced to a democratic mayor from Texas who had a great idea that could not work. Sort of like Karl Marx
    idea about everybody works and everybody gets what he needs.
    That didn't work either even as Mr O is pointed in that direction.

     

    As a history buff I try to get people to recognize previous failures on the part of all political parties. I could also write about Republicans who have been village idiots. The present one is Rick Scott of Florida who signed a bill that if you read it bans smartphones, tablets and even medical devices that send data
    via the internet because they wanted to stop internet cafes from helping gamblers.
    Remember if you write a law that says motorize vehicle with 18 wheels or more must be inspected don't be surprised when a large jet pulls up to the dmv inspection station
    12 Jul 2013, 08:17 PM Reply Like
  • mickmars
    , contributor
    Comments (1323) | Send Message
     
    Blue Dogs are an extinct breed. At least Elizabeth Warren, leftist that she is, is pointing out what all the other bought and paid for Repubs and Dems are afraid to even mention.

     

    We'll never stop this descent into Oligarchy, but it's refreshing to see some light shed on what the cockroaches are doing from time to time.
    13 Jul 2013, 08:08 AM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2380) | Send Message
     
    mickmars

     

    You must be from California to think the blue dogs are extinct.
    Maybe you can help e warren find her native ancestry while you look for blue dogs in the Midwest.
    13 Jul 2013, 09:44 AM Reply Like
  • mickmars
    , contributor
    Comments (1323) | Send Message
     
    "Blue Dog Coalition membership experienced a rapid decline in the 2010s decade, falling from 54 seats in the 111th Congress to only 14 seats in the 113th Congress."
    14 Jul 2013, 09:46 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2380) | Send Message
     
    MICKMARS

     

    I see you found information on blue dogs, there is three reason for the decline on the political level. 1] some went to the republican party 2] were not re-elected because a more conservative republican won 3] liberal democrats beat them in primaries.
    When a republican wins in an area dominated by democrats it's usually the blue dog votes that elected the republican.
    Conversely when a democrat wins in a republican area its because the candidate is a blue dog democrat.
    Many blue dog's don't join the coalition.
    When I lived on Long Island the NYS assemblymen was a blue dog democrat, the district contained less that 25 registered democrats yet he won around 60% of the vote.
    15 Jul 2013, 06:51 AM Reply Like
  • c243250
    , contributor
    Comment (1) | Send Message
     
    Time for McCain to retire...anything he does with that woman, Warren, who is out to destroy capitalism as we know it, the most super liberal person to be elected to US Senate, even more liberal than Obama, shows he has lost it.....and my respect as well.......
    12 Jul 2013, 06:45 AM Reply Like
  • gwynfryn
    , contributor
    Comments (4233) | Send Message
     
    I used to respect McCain, back when he stuck to his principles (regardless of whether I agreed with them) but that era ended a long time ago, and any respect was long gone by the time he made the stupidest running mate decision of all time. Is Warren really out to "destroy" capitalism, or merely to modify it? If the latter, then it is long overdue, for the current version isn't working for anyone but the rich and the greedy. There's no natural law, you know, that mandates that executives pay should be decided by other executives (a system just begging for abuse...)?
    12 Jul 2013, 08:31 AM Reply Like
  • MexCom
    , contributor
    Comments (3051) | Send Message
     
    The problem is that she doesn't have a clue how our money and banking system works. Ben while snickering during hearings at her questions proves the point - she needs to be educated on how things work before taking on the committee job. There needs to be some basic qualifications for a Senator to take on a committee position that critical to the economy. Its a good thing that people don't really take her seriously. But its fun to watch and laugh at her.

     

    I just watched her egg on her face interview on CNBC.
    12 Jul 2013, 09:17 AM Reply Like
  • Topcat
    , contributor
    Comments (423) | Send Message
     
    er, you object because a smart person with good ideas wants to fix the corrupt and fragile system, and perhaps prevent another depression? we almost all lost all our investments in 2008..get a clue..
    12 Jul 2013, 12:46 PM Reply Like
  • MexCom
    , contributor
    Comments (3051) | Send Message
     
    She is not even a smart politician. Showing your stupidity in public is just not the way to go. And, your blind support other than "liking" her has no merit. Pitt's interview today on CNBC countered her efforts very well. Its no help and only a desire to fix what already went bad where the problems have been solved with enforcement actions and self administering of precautions to not repeat these faults in banks' management of trading.
    12 Jul 2013, 01:09 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2380) | Send Message
     
    Anybody remember who and of what party trashed the original
    Glass-Steagall Act
    12 Jul 2013, 07:58 AM Reply Like
  • spinrbait
    , contributor
    Comments (351) | Send Message
     
    it was repealed under clinton
    12 Jul 2013, 08:08 AM Reply Like
  • Jake2992
    , contributor
    Comments (831) | Send Message
     
    Wrong, it was watered down to useless under Reagan. Glass Steagall was long gone by Clinton's time.

     

    http://bit.ly/14NlO3X
    12 Jul 2013, 08:13 AM Reply Like
  • mickmars
    , contributor
    Comments (1323) | Send Message
     
    Both. Was a Republican Congress (but most Democrats voted to repeal it too) and a Democrat President signed the repeal into law.

     

    Don't look for good guys and bad guys in the Dem/Repub parties anymore. They all serve the chosen few now.
    12 Jul 2013, 08:16 AM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2380) | Send Message
     
    jake2992
    you should read your own article
    nothing go PASSED during Reagan.

     

    On July 1, 1999, the House of Representatives passed (in a bipartisan 343-86 vote) a bill (H.R. 10) that repealed Sections 20 and 32. The Clinton Administration issued a statement supporting H.R. 10 because (unlike the Senate passed S. 900) it accepted the bill’s CRA and operating subsidiary provisions.

     

    On October 13, 1999, the Federal Reserve and Treasury Department agreed that direct subsidiaries of national banks (“financial subsidiaries”) could conduct securities activities, but that bank holding companies would need to engage in merchant banking, insurance, and real estate development activities through holding company, not bank, subsidiaries. On October 22, 1999, Senator Gramm and the Clinton Administration agreed a bank holding company could only become a “financial holding company” (and thereby enjoy the new authority to affiliate with insurance and securities firms) if all its bank subsidiaries had at least a “satisfactory” CRA rating.

     

    After these compromises, a joint Senate and House Conference Committee reported out a final version of S. 900 that was passed on November 4, 1999, by the House in a vote of 362-57 and by the Senate in a vote of 90-8. President Clinton signed the bill into law on November 12, 1999, as the Gramm–Leach–Bliley Financial Modernization Act of 1999
    12 Jul 2013, 08:21 AM Reply Like
  • gwynfryn
    , contributor
    Comments (4233) | Send Message
     
    You are both right, and it really wasn't the smartest move Clinton ever made...
    12 Jul 2013, 08:32 AM Reply Like
  • philipmax
    , contributor
    Comments (259) | Send Message
     
    This Bill is going nowhere. The Pols are just inflating their sail. Having said this, we need Glass-Steagall legislation put into effect as soon as possible. But, let's not kid ourselves, as many point out here, the big boyz have congress in their pockets. G-S wasn't repealed by accident. The only reason Sandy Weil was "allowed" to run CITI was to get G-S repealed. He succeeded in 1999, under Clinton, and it sealed the fate of our doom. Until the G-S is re-instated we can all say RIP to democratic capitalism.
    12 Jul 2013, 08:16 AM Reply Like
  • vireoman
    , contributor
    Comments (911) | Send Message
     
    It was an enormous mistake to repeal it. I don't know how the bill they are pitching differs from the original, and I doubt it stands much of a chance, but I'm glad SOMEONE is trying to do SOMETHING to fix the system, even if in some minor way.
    12 Jul 2013, 08:18 AM Reply Like
  • Angry Vet
    , contributor
    Comments (51) | Send Message
     
    What kills me about these poltical flame wars is how little the actual legislation and its presumed effects are discussed. Instead, the war just devolves to the usual finger pointing between partisans. Typical partisan tribalism, no analysis.

     

    And Americans say their Government is not representative... How laughable!

     

    Call me stupid, but... What is Glass-Steagall and why does it matter? What is the proposal that Ms. Warren is offering? And please, lay off the ad hominem attacks. Those only devalue your own position.
    12 Jul 2013, 08:22 AM Reply Like
  • philipmax
    , contributor
    Comments (259) | Send Message
     
    Dear Angry,
    Glass-Steagall were Senators in the mid-1930's who thoroughly investigated the main causes of the Great Depression and concluded that the banks were the main culprits of the Wall Street Crash of 1929.
    G-S operates to separate bank functions in order to maintain an arm-length distance between serving the business banking needs(i.e. loans, transfers, credit,etc.) and their capital needs (stock issuance, mergers etc.). Thus, main stream banks such as CITI,JPM, WFC, were not permitted to trade stocks, promote IPOs, invest in securities of corporations. etc.. Investment banks such a Goldman Sacks, Morgan Stanley, Lehman, Bear-Stearn, were allowed to do all that was forbidden to charter banks. The investment bankers were forbidden to offer banking services. This was a wall that lasted for 64 years and saved our economy from self dealing and collusion in stock price manipulation (to a degree). With the repeal of the G-S, bankers and Wall Street again went back to there double dealing ways of yesteryear leading to the debacle of 2008.
    Hope this helps.
    PS I don't have the foggiest notion of McCain-Warren Bill. just on the face of it, they don't have credibility, and the powers that be are far too dominating to let this Bill proceed.
    12 Jul 2013, 08:48 AM Reply Like
  • Angry Vet
    , contributor
    Comments (51) | Send Message
     
    Thanks, Phil. That appears to be the most on-point comment yet on this, though I don't really understand the "no credibility" part. Last I saw, you don't need credibility to pose legislation, at least if you are a Senator.

     

    I find it interesting how people are dragging executive compensation into separating bank interests. Appears to be a completely different topic.

     

    I do have to say, I've had a great run with BAC.

     

    As major legislation has little hope of passing this Congress anyway (on any topic- immigration, gun control, tax reform, the list is endless), it appears this news blurb is all bark and no bite. I mean, they can't even pass immigration reform, which "establishment Republicans" seem to want.
    12 Jul 2013, 09:00 AM Reply Like
  • philipmax
    , contributor
    Comments (259) | Send Message
     
    xactly!
    12 Jul 2013, 09:16 AM Reply Like
  • bfschutz
    , contributor
    Comments (3) | Send Message
     
    It takes a woman......like Elizabeth Warren to fix things that have gone wrong. She is a Red Queen that I admire! I am still fuming about that $59 million bonus received by Lloyd Blankfein of Goldman Sachs in 2009. That bonus and similar bonuses provided for other bigwig bankers represent everything bad about banking these days. And he has a new vacation home too, while all those mortgage holders are under water. It is a travesty. YOU GO GIRL!!!
    12 Jul 2013, 08:48 AM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2380) | Send Message
     
    bfschutz

     

    I think you should research E Warren.

     

    As to Lloyd bonus from GS in 2009 it was not tax payer funds

     

    Mr O administration has wasted 1,000 times that bonus with taxpayer funds and EW helped.

     

    Most mortgage holders are underwater because they bought into the bubble that anybody who understands math saw coming. I sold in 2005 my home on Long Island for 625k. It available for 489k today. I rented for 2 years then came to Texas. No growth but no loss either
    12 Jul 2013, 09:09 AM Reply Like
  • mickmars
    , contributor
    Comments (1323) | Send Message
     
    Lloyd was just doing God's work. All that casino wealth accumulation is gonna trickle down to the rest of us soon.
    12 Jul 2013, 09:42 AM Reply Like
  • MexCom
    , contributor
    Comments (3051) | Send Message
     
    She also wants to help students by lowering student loan rates to decrease their debt. Lets see - if your lower rates that would encourage students to borrow more and her logic is that it would reduce student debt! What we need is to make student loans at a market rate. That way they won't buy cars with the money if a car loan rate is lower and won't buy homes if mortgage rates are lower than student loan rates. She just doesn't get it.
    12 Jul 2013, 10:00 AM Reply Like
  • Topcat
    , contributor
    Comments (423) | Send Message
     
    They are not buying cars and vacations..you borrow what you can document you need...we need to encourage education ANYWAY we can..our lack of investment has resulted in the majority of Americans being clueless and has resulted in nutcase groups like the Tea Party and Supreme Court justices that think corporations are people!
    12 Jul 2013, 12:56 PM Reply Like
  • MexCom
    , contributor
    Comments (3051) | Send Message
     
    Sure. Instead of taking a bus to class - you need a car! And, to have a study break you need to fly to Florida and you need to fly home for Thanksgiving. Then you need Jr. Prom tickets and to pledge a fraternity. All the money they would normally forgo for these frills that go along with going to college would probably be paid with a low interest rate loan "paying" for the books, dorm room, laptop computer, etc. Then when they graduate, they have a worthless degree, can't get a job and would probably default on repayment of the loan destroying their credit rating and becoming a worthless member of society. The power to do good in this case would do a lot of harm in many cases.
    12 Jul 2013, 01:20 PM Reply Like
  • Matt O'Brien
    , contributor
    Comments (37) | Send Message
     
    Actually, the Glass-Steagall law was and would be useless. Decades ago Canada ditched its version of Glass-Steagall and no housing and credit bust ensued in its economy.
    The law was passed as knee-jerk reaction during a time of crisis when populist statists used fear as a tool to give themselves more power.
    I saw Warren on Squakbox this morning and listened to her drivel. A person like this is a threat b/c of her lack of understanding about legistlative cause and effect and individual liberty. Her rant about the deregulation of our economy and its cause of the credit meltdown is absolutely absurd when you look at the facts. As the Competitive Enterprise Institute's Clyde Wayne Crews shows in his invaluable annual survey of the federal regulatory state, we have become the regulation nation almost imperceptibly. Excluding blank pages, the 2012 Federal Register—the official directory of regulation—today runs to 78,961 pages. Back in 1986 it was 44,812 pages. In 1936 it was just 2,620.
    True, our economy today is much larger than it was in 1936—around 12 times larger, allowing for inflation. But the Federal Register has grown by a factor of 30 in the same period.
    The last time regulation was cut was under Ronald Reagan, when the number of pages in the Federal Register fell by 31%. Surprise: Real GDP grew by 30% in that same period. But Leviathan's diet lasted just eight years. Since 1993, 81,883 new rules have been issued. In the past 10 years, the "final rules" issued by our 63 federal departments, agencies and commissions have outnumbered laws passed by Congress 223 to 1.
    Right now there are 4,062 new regulations at various stages of implementation, of which 224 are deemed "economically significant," i.e., their economic impact will exceed $100 million.
    The cost of all this, Mr. Crews estimates, is $1.8 trillion annually—that's on top of the federal government's $3.5 trillion in outlays, so it is equivalent to an invisible 65% surcharge on your federal taxes, or nearly 12% of GDP. Especially invidious is the fact that the costs of regulation for small businesses (those with fewer than 20 employees) are 36% higher per employee than they are for bigger firms.
    As some of us know small cap stocks are a great barometer to gauge future trends in the market. The Russell 2000 is down -0.51 in June.
    Warren is a dangerous political hack and voters should be ashamed of placing someone like this into office. Extremely irresponsible.
    You can ignore reality, but you cannot ignore the consquences from ignoring reality.
    12 Jul 2013, 09:31 AM Reply Like
  • philipmax
    , contributor
    Comments (259) | Send Message
     
    Matt, you have given us great information. Unfortunately, you haven't explained why Glass-Steagall was bad. Thanks to you, I am now awakened to the volume of verbiage scrolling out of congress.
    As you put it so well, there is way too much legislation and most of it is constrictive. My thoughts on this is that BIG BUSINESS runs to congress to enact restrictive laws that choke off competition and give these guys monopolies.
    Generally, a congressman is more incline to bask in his own glory that to propose new legislation. Self interest groups bring the drivel legislation for them to pass selfish laws, and the congress rubber stamps them. But..that's for another board.
    I repeat, Glass-Seagall was passed AFTER the worst of the Great Depression was over, and cool smart people figured out the causes.
    12 Jul 2013, 09:46 AM Reply Like
  • Matt O'Brien
    , contributor
    Comments (37) | Send Message
     
    Repeal of Glass-Steagall has become for the Democratic left what Fannie Mae and Freddie Mac are for the Republican right — a simple and facially plausible conspiracy theory about the crisis that reinforces what they already believed about financial markets and economic policy.
    But why let facts get in the way of a good screenplay?
    Facts such as that Bear Stearns, Lehman Brothers and Merrill Lynch — three institutions at the heart of the crisis — were pure investment banks that had never crossed the old line into commercial banking. The same goes for Goldman Sachs, another favorite villain of the left.
    The infamous AIG? An insurance firm. New Century Financial? A real estate investment trust. No Glass-Steagall there.
    Two of the biggest banks that went under, Wachovia and Washington Mutual, got into trouble the old-fashioned way – largely by making risky loans to homeowners. Bank of America nearly met the same fate, not because it had bought an investment bank but because it had bought Countrywide Financial, a vanilla-variety mortgage lender.
    Meanwhile, J.P. Morgan and Wells Fargo — two large banks with big investment banking arms — resisted taking government capital and arguably could have weathered the crisis without it.
    14 Jul 2013, 10:20 AM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2380) | Send Message
     
    MATT

     

    Could you define you definition of commercial bank because by my definition they sure did.
    14 Jul 2013, 10:44 AM Reply Like
  • Matt O'Brien
    , contributor
    Comments (37) | Send Message
     
    Hmmm? This is not really up for debate, Bear, Lehman, and Merrill were pure investment banks. They did not take deposits from or open checking accounts for commercial entities.
    To be honest the removal of the Glass-Steagall law was not the cause of the credit bubble burst. The current fractional reserve banking regime and its money printing, inflationary practices created the mess we are in. One of our fellow Seeking Alpha contributor Pater Tenebrarum wrote a great piece on that topic here: http://seekingalpha.co...

     

    Best of luck.
    15 Jul 2013, 09:40 AM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2380) | Send Message
     
    matt
    This is why I asked what your definition was because limiting
    you answer to
    They did not take deposits from or open checking accounts for commercial entities.
    This wrong and misleading as to what commercial banks do. Commercial bank do much more
    As to Bear, Lehman and Merrill we should start with each had foreign bank charters.
    Each provided an account that took a deposit and excess cash was put in a sweep account.(like a savings account)
    Merrill had a draft account called CMA which functioned as a checking account, Bear and Lehman had similar products
    They all traded currencies like a commercial bank.
    They traded commodities like a commercial bank
    They traded commercial paper and bankers acceptances like a commercial bank. Their foreign subs. issued letters of credit.
    They issued loans to businesses.
    True they could not issue checking accounts but that was true of
    savings banks until they came up with now accounts

     

    I just read Tenebrarum opinion, I disagree however that's why we here to read other's opinion and make choices.
    His opinion was also in vogue in the 1978 -81 period. As you are aware those who bought gold then are able to make a paper profit but in terms of cash flow and opportunity gold needs to be over 2700 to break even.
    15 Jul 2013, 12:23 PM Reply Like
  • Matt O'Brien
    , contributor
    Comments (37) | Send Message
     
    From a Glass-Steagal perspective all those institutions could have performed the same functions as described above. Regardless, they are pure investment banks. Some were mortgage brokerages while others were mostly retail banks. I know, I'm in the industry.
    I do agree with the spirit of the Glass-Steagal law, which aims to protect John Q public's deposits from risky investment bank activities. If we all agree with this simple position, I would then think you favor policies and laws that would force banks to carry 100 percent ratios. This would force the banking industry to be true guardians of people's hard earned money. Presently, banks (retail and commercial) take people's money and lend it out to risky ventures and only have to keep 4 - 6 percent on deposit. No wonder Jefferson called banks a "den of thieves." Sen. Warren cited the number of boom and busts that ensued since the 1790s when she was on squak box the other day. Look no further than the legal privilege that is bestowed upon banks to take people's money and lend it out as a reason why all those credit bubbles resulted. Meanwhile, the depositers assume their money is safe in the bank's vault and readily available at their demand, hence the age old term DDA - demand deposit account.
    100 percent reserve ratio and the gradual abolition of central banks will restore soundness to curriencies and allow for the natural deflationary and inflationary effects of market economy.
    15 Jul 2013, 02:52 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2380) | Send Message
     
    MATT

     

    I got into the industry in 1963 working part time while a sophomore in high school. Over my history I worked for a Commercial bank, Wall Street Brokerage House, Foreign Financial Conglomerate, Foreign Investment Bank and the U S Treasury. I believe my hands on experiences are a little more than most. I see you are what we called in the old days a register rep. or calling officer but have you any real banking experience. My definition of real banking
    experience would be operations, administration ,credit/risk or finance/reporting?
    you mention the term DDA or Demand deposit account, brings back memories of the joke the regulators had on the public.
    like everything in this world today no one reads the small print
    of what a demand account was.
    Like savings account the public ask (demand) for their funds
    and the financial institution has between 60 -180 days to make the payment based on each state. The only time I ever heard of a bank not paying on the day asked was when the FDIC was transitioning a bank
    I must have missed something but if I have 100% ratio how does
    a bank make a large mortgage loan or handle the various mismatch positions?
    15 Jul 2013, 03:54 PM Reply Like
  • Matt O'Brien
    , contributor
    Comments (37) | Send Message
     
    Nice resume. It adds little to the argument however. Go back further than DDA and look up the Monetary Irregular-Deposit Contract.
    With the 100 percent reserve ratio banks would make loans thru fees and interest collected from its customers.
    15 Jul 2013, 06:59 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2380) | Send Message
     
    matt
    I don't look at this as an argument but a set of comments to understand
    each contributors knowledge. When you mentioned Tenebrarum opinion, I
    pointed out that historically it did not work out well. Of course that doesn't mean history will repeat it self this time.
    Where does one find a copy this contract? Sounds some what like
    that economist from the last century . the karl marx of Iberia banking I believe was the joke. I noticed you did not answer my questions. How does a bank make a large mortgage loan or handle the various mismatch positions and have you any real banking experience.
    15 Jul 2013, 07:47 PM Reply Like
  • Matt O'Brien
    , contributor
    Comments (37) | Send Message
     
    My knowledge is derived from experience and education. This is not a discussion of my resume. Its pretty obvious I have banking experience since I am employed by one of the largest in the world. Please carefully re-read my profile. Tenebrarum's position has never worked because its never been allowed to fully flourish b/c of govt policy. However, throughout history there have been small exceptions, see history of Bank of Amsterdam - its role as a refuge for capital fleeing the crazy inflationist speculation that the system of John Law produced in France in the 1720s. During this entire period, to all intents and purposes the Bank of Amsterdam maintained a 100-percent cash reserve. This allowed it, in all crises, to satisfy each and every request for cash withdrawal of deposited florins. Such was true in 1672, when panic caused by the French threat gave rise to a massive withdrawal of money from Dutch banks, most of which were forced to suspend payments (as occurred with the Rotterdam and Middelburg banks). The Bank of Amsterdam was the exception, and it had no trouble returning deposits. Increasing and lasting confidence in its soundness resulted, and the Bank of Amsterdam became an object of admiration for the civilized economic world of the time.
    Just Google Monetary Irregular-Deposit Contract.
    I did answer your question in a previous post. Please take your time and re-read. There is no need to rush.
    16 Jul 2013, 09:04 AM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2380) | Send Message
     
    matt

     

    Here is the problem your resume tell us what experience and education you have. your profile said Partnering with Wells Fargo's
    does not mean employed. The guys at countrywide partnered with Wells Fargo also and we know where that went.
    You might remember "I asked "Where does one find a copy this contract? Sounds some what like that economist from the last century . the karl marx of Iberia banking I believe was the joke."

     

    At the time I was think of the Bank of Amsterdam and Jesus Huerta de Soto.

     

    You should have continued your reading of the Bank of Amsterdam
    Unfortunately, in the 1780s the Bank of Amsterdam began to systematically violate the legal principles on which it had been founded, and evidence shows that from the time of the fourth Anglo-Dutch war, the reserve ratio decreased drastically, because the city of Amsterdam demanded the bank loan it a large portion of its deposits to cover growing public expenditures. Hence, deposits at that time amounted to twenty million florins, while there were only four million florins’ worth of precious metals in the vaults; which indicates that, not only did
    the bank violate the essential principle of safekeeping on which it had been founded and its existence based for over one hundred seventy years, but the reserve ratio had been cut from 100 percent to less than 25 percent. This meant the final loss of the Bank of Amsterdam’s long-standing reputation: deposits
    began to gradually decrease at that point, and in 1820 they had dwindled to less than one hundred forty thousand florins.
    The Bank of Amsterdam was the last bank in history to maintain a 100-percent reserve ratio, and its disappearance marked the end of the last attempts to found banks upon general legal principles. The financial predominance of Amsterdam was replaced by the financial system of the United Kingdom, a much less stable and less solvent system based on the expansion of credit, deposits and paper currency.

     

    There were several "Banks" that tried that idea going bank to the Saxons
    hundreds of years before Bank of Amsterdam.
    16 Jul 2013, 10:16 AM Reply Like
  • Matt O'Brien
    , contributor
    Comments (37) | Send Message
     
    Not a partner, I'm a "private" bank officer. I use personnel in other departments to access services for commercial, investment, insurance, debit/credit card transaction processing, and others for customers.
    Seems like de Soto's review of the bank of amsterdam validates the point I am making.
    BTW, I read Jesus Huerta de Soto's "Money, Bank Credit, and Economic Cycles" in its entirety. Brillant piece of work.
    16 Jul 2013, 11:28 AM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2380) | Send Message
     
    matt
    I didn't say partner
    your profile said Partnering with Wells Fargo's
    I used copy and paste of your profile, I also would never use the word regional when working for Wells Fargo. I assume you work with WF advisors you should read some of the history of AG Edwards and Wachovia fiascos over the years. A relative of mine who had an IRA with WD Advisors tried in November to open up a Roth there by moving securities from the Ira to Roth. It took four months and 17 phone calls to get it done. All the conversation were taped and their cousin is writing up a case study. I digressed sorry.
    If you think de Soto work is brilliant you'll love Das Kapital.
    you might remember when you first mentioned
    Monetary Irregular-Deposit Contract I said it "Sounds some what like that economist from the last century . the karl marx of Iberia banking I believe was the joke

     

    I guess you didn't read about bank of Amsterdam ultimately failed.

     

    that's why after a half dozen tries over 8 centuries it does not work.
    16 Jul 2013, 11:56 AM Reply Like
  • Matt O'Brien
    , contributor
    Comments (37) | Send Message
     
    Read Das Kapital in college. No thanks.
    Yes, I did read about the demise of the bank of amsterdam. They deviated from 100 percent ratio policy.
    16 Jul 2013, 03:02 PM Reply Like
  • WPSPIKER
    , contributor
    Comments (1151) | Send Message
     
    The repeal of the G-S act was a poor choice just like the commodities modernization act. They took the separation of consumer banking and commercial (trading) away with GS removal. Then they took the regulatory requirements away that stopped the banks from speculation in commodities. So Banks can buy oil (any commodity) and speculate on it going up. They could prior on investment banks but were limited to how much oil futures contracts they could hold as a % of their size. After the act of 2000 signed by Clinton they could leverage themselves to corner oil and drive prices up which they have done.
    Then they repealed all the other good laws created after the great depression such as the Uptick Rule, having to find and barrow a stock prior to shorting et-all. This all lead to the bubbles of the fair housing act also signed by Clinton that said everyone deserved to own a home. So Banks that had good loan habits were told to loosen their standards to give people who could not afford a home a loan. which has all forced the 2008 crash and ensuing government debt explosion.

     

    They should reset all government rules and regulations back to what they were in 1988 when Regan left. Give back some of the Freedoms and Rights that have been regulated away too! Problem is the last decade Congress, Senate and Pres have only worked to help line their pockets, the executives and Lobbyist pockets while taking from Joe Plumber common guy.

     

    Mark
    12 Jul 2013, 09:54 AM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2380) | Send Message
     
    WPSPIKER

     

    I agree with most of what you say, back in the 80's I worked for a foreign bank that traded futures. Each future group had a 3500 contract limit unless you got a waver from the CFTC. Well we asked and got wavers as required by the regulations. The Fed Res comes in for it's annual visit with the NYS banking. The head examiner looked at our numbers and called HQ because our positions in our branch were larger than Chase and Citi. The next day we were visited by the top examiners of the Fed and they informed us our positions were over the 3500 limits. The CFTC had never forwarded our wavers to the Fed. Lets just say they were looking for 4 digit contract numbers and ours were 5.
    12 Jul 2013, 01:52 PM Reply Like
  • philipmax
    , contributor
    Comments (259) | Send Message
     
    I think the regulators were "sicked on you'' by your competitors. Won't be the first time I heard this done.
    12 Jul 2013, 05:15 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2380) | Send Message
     
    PHILIPMAX

     

    no just incompetent staff at the CFTC
    12 Jul 2013, 05:54 PM Reply Like
  • philipmax
    , contributor
    Comments (259) | Send Message
     
    Yes! DEFINITELY YES!
    Couldn't have been achieved without those CFTC guys.
    13 Jul 2013, 11:55 PM Reply Like
  • Voice of common sense
    , contributor
    Comments (119) | Send Message
     
    I wish them luck going against the entrenched financial mafia with all of their abundant resources.
    12 Jul 2013, 01:39 PM Reply Like
  • stabletker
    , contributor
    Comments (57) | Send Message
     
    Every time you people "speak", an angel dies.
    12 Jul 2013, 03:40 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2380) | Send Message
     
    stabletker

     

    would that be a white or black angel?
    12 Jul 2013, 03:49 PM Reply Like
  • MexCom
    , contributor
    Comments (3051) | Send Message
     
    The whole problem was the bubble caused buy exuberance of the real estate market, people over extending themselves with the housing piggy bank to borrow money beyond their repayment ability. The financial institutions got caught up in CDS market and got caught holding the bag when the crash occurred in these hedges and the required mark to market wiped them out. With out the repeal of Glass Stangle, BAC wouldn't have been able to bail out Merrill and Countrywide. You guys would be out on the street selling apples right now to raise money not for luxuries but to buy food. The big banks came to the rescue but with E Warren's proposals if in effect at the time we would now be the worst economic depression in our history.
    14 Jul 2013, 03:45 PM Reply Like
  • NYCTEXASBANKER
    , contributor
    Comments (2380) | Send Message
     
    MEXCOM

     

    I agree in many ways however the problem to me was a lack of enforcement, stupid regulators and dumb and dumber better know as freddie and fannie.
    Four regulations that should be in place tomorrow
    1] 10% minimum down payment
    2] lender must keep 25% of loan on books (if mortgage broker involved no payment of commission for 5 years or broker as an individual must return commission if loan defaults within 5years and commission claw back not under bankruptcy restrictions.)
    3] Mandatory blacklist for walkaway borrowers.
    4] if second home or investment property loans are recourse loans.
    14 Jul 2013, 06:55 PM Reply Like
  • MexCom
    , contributor
    Comments (3051) | Send Message
     
    The renewal of G S is a dead issue. Angus King, co sponsor of the bill is even backing off on the prospects of it even coming up for a vote. Would never pass if it did get a vote.
    17 Jul 2013, 09:23 AM Reply Like
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