Oh that crazy Glass-Steagall Act...

[Javaman]

The reinstatement of the Glass-Steagall Act, that is certainly something we all get behind right?

But let me paint you a little picture of what the future will hold in regards to it being reinstated, shall I?

We will write petitions, we call our senators and reps. They make all sorts of proclamations. The House gives us their version of the bill. The repuke minority goes crazy. A "deal" is made. Why? I don't know, since we have majority. Then it's passed on to the senate. They make their bill, which is nothing more then the further watering down of the houses version. The repukes go crazy. A "deal" is made. Why? I don't know, since we have majority. Then back to the house it will go. Where several democratic senators, prior to it ever being written, made the claim that they wouldn't support a weak bill that didn't include the original Glass-Steagall act. But now that the Glass-Steagall isn't included, they will suddenly throw their support behind this white washed tissue paper of a bill because "it has some good stuff it in and it's still a solid bill". They roll over and get their tummy's rubbed by the lobbyists.

During all of this, the media morons and the corporate wall street sycophants will be wringing their hands and screaming about how "life is just so unfair" and make all sorts of pronouncements regarding on how, "they saved this country from financial ruin!!" but conveniently forgetting the little fact that they caused it.

In the mean time, the corporate astro-turf group ball lickers of America, will scream from corner to corner how they "don't want the gumbmint in our bidness!!!" And have that same slogan along with several other misspelled signs scattered among their willfully ignorant protests.

At the end of the day, after much more back room dealing, the public will be presented with some sort of paper held up by harry reid or nancy pelosi saying something to the effect, "the president can now put his name on this bill with full confidence of it's enforcement and it's effective controlling of the wanton out of control practices that wall street took complete advantage of over these past several years after the Glass-Steagall act was repealed!! The adults are now in charge!!"

What won't be said is; 1)That there's a sunset clause 2) it won't take effect for another 10 years 3) only those companies that did the actual trading, not the parent corps, will be the ones on the block 4) the parent corps will actually get more freedom to screw us over 5) salaries and bonuses of the top officers of the corps will actually go up 6) 60% of the work staff will be cut to spite the public and to cause more outrage. Deftly promoting the fact that anything the public wants to change is "actually bad" for themselves. So aka don't try to change anything.

It won't look anything like it did when we first started trying to get the Glass-Steagall Act reinstated. However, we will have been so brain washed at the end that we will be glad to even get anything. Those who still scream and yell that nothing was accomplished will be vilified as being, "Never satisfied! Ney Sayers!, Against Obama, etc".

More over, if we had just used the original act, instead of jumping through all the flaming hoops of bullshit, we would have had the restrictions that served us oh so well for many many years in the past, back in place.

But you all know by now, just repealing something doesn't play well in Peoria, all the bastards in Congress need to continually boost their already over inflated egos to extend their perpetual 15 minutes of fame.

Does any of this sound the least bit familiar to any of you?

color me jaded. I'm old, cranky and tired of all the lack of responsibility and out pouring of pure unadulterated bullshit by those in power.

[Recursion]

1. I have yet to see a convincing argument that Glass-Steagall would have prevented last year's fiasco

Barney Frank pointed out several times that the bad actors were the pure investment banks, and it was the non-existence of G/S that let the retail banks buy them and avoid making the bailout even larger than it was.

[AllentownJake]

2. AIG

AIG would not have been allowed to write the derivative contracts that enabled the fraud if there was Glass Steagall, they would have been stuck as an Insurer. The reason that auditors and the government allowed some of the risk taking was it was "insured" with a derivative contract that was not capable of being paid and was not really insurance.

AIG fought tooth and nail to prevent the contracts from being classified as "insurance" because once that happened they would be subject to reserve requirements and would have not been able to issue as many. If AIG was an insurer, they couldn't engage in this activity to begin with, unless it was an "insurance" product.

Another player might have stepped in and done what AIG did, but 75% of the reason that derivatives issued by AIG were acceptable was they were issued by AIG. I told my Mom 5 years ago when her 403(b) plan went to Valic (a subsidiary of AIG) from Met Life her investments were as safe as they possibly could be. My logic was if AIG goes down, we will have bigger things to worry about than your retirement account.

[FreakinDJ]

3. Not so sure about that

From what I saw the intermingling of Securities and Savings is what directly led to the demise of many banks. They used the Mortgage Derivatives as a "Credit" because it was backed by a CDS. Prior to the rescinding of the Glass-Steagall Act they would have shown the Mortgage Derivative as a "Risk"

[FreakinDJ]

4. self delet

[Ruby the Liberal]

5. It wouldn't have prevented anything. Wall Street was making up shit as they went along. HOWEVER

What GS did was prevent the commercial/retail banks, investment banks and insurance companies from being under one roof.

The repeal of GS allowed AIG to act as both insurance and investment, with black book deals.

It allowed Bear to leverage upwards of 50%

Post crash, it allowed Goldman and Morgan Stanley to declare themselves "bank holding companies", while not (yet) in commercial/retail - they can borrow from the Fed discount window at 0% interest to fund their gambling habit.

The list goes on and on.