Two of the most prominent liberals in the Senate have joined forces to take on the big banks as Sen. Bernie Sanders (I-VT) has announced that he is teaming up with Sen. Elizabeth Warren (D-MA) to co-sponsor her bill that would reinstate the Glass-Steagall Act.
In a statement, Sanders said: "I strongly support Sen. Elizabeth Warren's bill to reinstate the Glass-Steagall Act."
On July 1, 1999, while Congress was voting on the Gramm-Leach-Bliley Act to permit commercial banks, investment banks and insurance companies to merge, then-Rep. Sanders said: "I believe this legislation, in its current form, will do more harm than good. It will lead to fewer banks and financial service providers; increased charges and fees for individual consumers and small businesses; diminished credit for rural America; and taxpayer exposure to potential losses should a financial conglomerate fail. It will lead to more mega-mergers; a small number of corporations dominating the financial service industry; and further concentration of economic power in our country."
Allowing commercial banks to merge with investment banks and insurance companies in 1999 was a huge mistake. It precipitated the largest taxpayer bailout in the history of the world. It caused millions of Americans to lose their jobs, homes, life savings and ability to send their kids to college. It substantially increased wealth and income inequality and it led to the enormous concentration of economic power in this country.
I am proud to have led the fight in the House against repealing the Glass-Steagall Act in 1999. Sixteen years ago, I predicted that such a massive deregulation of the financial services industry would seriously harm the economy. I would give anything to have been proven wrong about this but unfortunately what happened seven years ago was even worse than I predicted.
Today, not only must we reinstate this important law, but if we are truly serious about ending too big to fail, we have got to break up the largest financial institutions in this country. If an institution is too big to fail, it is too big to exist.
The legislation to reinstate Glass-Steagall was introduced by Democratic Senators Warren and Cantwell (D-WA) along with Republican John McCain earlier this month. At the time, Warren said, "Despite the progress we've made since 2008, the biggest banks continue to threaten our economy. The biggest banks are collectively much larger than they were before the crisis, and they continue to engage in dangerous practices that could once again crash our economy. The 21st Century Glass-Steagall Act will rebuild the wall between commercial and investment banking and make our financial system more stable and secure."
It is at this point that the obvious must be stated. Despite the support of McCain, Senate Republicans are going to squash this bill. However, the point of this legislation isn't passage. Congressional liberals have quickly become experts as using their minority status to introduce publicly popular legislation that raises the profile of important issues while putting Republicans on the hot seat by forcing them to defend positions that place them in opposition to a majority of the public.
The judging of proposed legislation based on odds of passage promotes a myopic view that ignores long-term goals and the big picture. Liberals are trying to change the public discussion on issues like the big banks and financial reform, but to begin that conversation the public must have the opportunity to become aware and informed.
Republicans thrive when voters and constituents are uninformed.
The repeal of Glass-Steagall was signed into law by former President Clinton, who has continued to defend his deregulation. Glass-Steagall could be a thorny issue for Hillary Clinton on the Democratic primary campaign trail. The post-Great Recession era is not the go-go 90s. Senate liberals are fighting to keep the country from repeating the economic mistakes of the recent past.
The above---which is not on news today with the downturn of the Stock Market---is critical to it because Corps, Banks, and Insurance Companies are in a conspiracy of control.
When studying the history of finance in my basic Insurance Course to get my NC License, an interesting fact came to light: During the Great Depression the Insurance Industry was the ONLY one which did not fail. The Banks failed. Stocks failed, but not Insurance. The basic reasons for such were:
Insurance is based on conservative accounting methods with a RESERVE.
People thought enough of their family security they kept paying the premiums as a priority.
Describes how they tried
in 1929 to withdraw their deposited money from the banks, but the bankers had made off with it and closed their doors. They got reports on their stock investment that one after the other had gone belly up.
Insurance companies knew when they designed their products that they best not fail OR they would be so liable for making the death benefit payment within 90 days that no jury would fail to convict them for fraud. Criminal charges awaited any scoundrels who took money and deprived spouses and children of their security after father's death. They had to KNOW WHAT THEY WERE DOING AND BE ACCOUNTABLE TO THE SPOUSES AND FAMILIES LEFT BEHIND.
NOT SO as we look at the banks and investment firms of today's Great Recession:
Lemon Brothers went under because they got too risky on real estate speculation. The government (us taxpayers) ultimately bailed them out.
The first insurance company failed because it insured the stupidity of high risk DERIVATIVES.
The auto industry failed because of foreign competition and inferior cars
"What is a DERIVATIVE?"--- You might ask. Let me put it in understandable terms.
If you went into a cow pasture and picked up a big dried cow pie. Next, you put it in a sealed plastic bag so the smell is not detectable. Then you cover it with gold or silver colored foil and sell it to a fool as precious metal --- you have a DERIVATIVE. They were described as so complex with their math that few really understood anything more than high risk / big return AND bought them. GREED was at the core of their decision to buy.
The trouble was that banks and investment firms got so used to impressing clients with high returns they fell in the P.T. Barnum category of "SUCKER buying a ticket." We expect more of supposedly astute professionals, but the events of 2007 showed a sucker is born every minute to fleece --- even those with a Securities license / financial certification / fancy degrees from a School of Finance. Common sense left the leaders --- and then the investors got stuck with empty pockets.
A full description of Great Recession is here
I once worked for a company which did both stocks and mutual funds along with insurance products requiring me to get my Series 6 Securities License to sell them. We had a big meeting at Myrtle Beach where all the vendors for investments and mutual funds did their sales pitch to get us to sell their products. The vendors were all name brand folks you would recognize from their TV commercials. No company vended to us which was not a proven player in finance.
The thing that impressed me most was the gathering on Friday evening at the bar/conference room and the players who were my fellow ASSOCIATES of the company. The men who sold stocks were the quickest to the bar / ordered stiff drinks / slapped each other on the back / bragged as if they had never lost a client any money whatsoever. Never losing money is not part of stockbroker reality.
Others in that room were like me --- we all had the same Securities License, BUT we sold our mutual funds inside Insurance policies. There were always tax consequences in our minds because Insurance has a TAX FREE death benefit. It also has the advantage of NO TAXABLE GAINS as long as the money stays inside the policy as the Cash Values.
It is far different with Stocks and Bonds. Did your investment statement ever show the negative figures of commission or taxable gain when changed? I do not know of any stock reports which show such to the client. You can pull out your tax form and then see the damage of a taxable gain or loss, BUT how many investors do the math on such???
There are far more details and tax-saving tips I could share, but let's keep in simple: The difference between good and bad advice from a Stockbroker---IS A COMMISSION! The merging of banks and other investment entities eliminates competition --- which drives real capitalism --- which should give the average person the best bang for his buck!
Way back when the great Republican, Teddy Roosevelt, was president we had a problem just like today. Those few who owned so much were called the Robber Barons because they were ruthless and wanted it all to themselves. Their names were Carnegie / Vanderbilt / DuPont and others. Many have their names on banks, educational institutions, railroads, concert halls and other big industrial entities today.
Roosevelt did what was called Trust Busting. In other words, his political leadership led to the breakup of large conglomerates owned by the few. Today we would call them Corporations. The US Congress and President passed measures to spread the wealth with smaller businesses competing more fairly with one another.
Interstate Commerce Laws were passed which also limited the range of such corporations to the individual states in which they operated. At the time individual names were attached to each company. Today we call the same things such-and-such Corporation with vast and varied holdings. They have become so vague that it is hard to value them exactly in less than 3-5 years of serious accounting. That is another way of saying UNKNOWN REAL VALUE.
Today has another factor of HIDDEN HOLDINGS with Offshore Banking and Shell Corporations --- both are purposely designed to minimize taxation and hide company assets. We working stiffs have to pay our taxes. The big boys are looking for every fancy way to avoid theirs. The best-paid Lawyers and Accountants are the ones who deal with Tax Avoidance.
http://www.commondreams.org/news/2015/06/17/exposed-how-walmart-spun-extensive-and-secretive-web-overseas-tax-havens shows how our favorite discount store does part of its method of "savings" by avoiding their taxes! They are, arguably, the leading corporate entity in slick accounting and tax savings so we get to "save money by paying our taxes" to support the roads and infrastructure provided for a free-loading corporation all over America.
Is it time to stop the Corporate Welfare???
I certainly think so . . . History has proven GREED NEVER STOPS ON ITS OWN . . .