- Because the bankers & wall street marker makers & their lobbyists ($350 M spent on repeal) do not want to hear from us, they do not want us meddling in their game and changing their control of our money, they do not want to lose control of US and they do not want to have lower cash bonuses !
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZzSgUbRMR7o&refer=home#
By Erik Schatzker and Christine Harper
March 9 (Bloomberg) -- Alan “Ace” Greenberg, the former Bear Stearns Cos. chief executive officer, said he sees a “very small” chance the Great Depression-era Glass-Steagall Act that separated banking and investment banking could be reinstated.
“Practically you can forget about it, it’s not going to happen,” Greenberg, 81, said today in an interview on Bloomberg Television. “The people who lobbied so extensively for the extinction of Glass-Steagall are still around.”
The 1999 repeal of Glass-Steagall, which allowed banks to take bigger risks and let investment banks boost lending, may have contributed to the worst financial crisis since the Great Depression, some analysts have argued. Paul Volcker, the 81-year- old former Federal Reserve chairman who now heads President Barack Obama’s Economic Recovery Advisory Board, has proposed re- creating a “two-tier” financial system that would limit risk- taking by the biggest, most systemically important institutions.
“It may be right or it may be wrong, but practically I think he’ll run into a little bit of opposition from the same people who fought so hard for the death of Glass-Steagall,” Greenberg said after the televised interview. “I think he’ll have trouble.”
Larry Summers, Obama’s top economic adviser, supported the repeal of Glass-Steagall in 1999 when he was Treasury secretary under former President Bill Clinton, as did his predecessor, Robert Rubin. Timothy Geithner, who now serves as Treasury secretary, was Undersecretary for International Affairs under Rubin and Summers.
JPMorgan Sale
Greenberg spent almost 60 years at Bear Stearns and was chairman of the company’s executive committee when it was forced into a government-assisted sale to JPMorgan Chase & Co. almost a year ago to avoid a bankruptcy. He now works at JPMorgan, the second-biggest U.S. bank by assets after Bank of America Corp.
Bear Stearns’s collapse prompted unprecedented involvement by the U.S. government in the rescue of an investment bank, with the Fed agreeing to finance $30 billion of assets held by Bear Stearns to help ease the deal for JPMorgan.
The Fed also started offering loans to investment banks through a new Primary Dealer Credit Facility, which was followed by other emergency measures to rescue companies including Fannie Mae and Freddie Mac, American International Group Inc., Citigroup Inc. and Bank of America Corp.
Obama is “doing everything he can” to solve the crisis, Greenberg said. “He’s doing things, and I think like all Americans I hope they work.”
Greenberg said he didn’t blame Geithner, who was New York Federal Reserve Bank president at the time of Bear Stearns’s sale to JPMorgan, for forcing the transaction.
“I don’t know him, I’m sure he’s a very capable guy and I don’t blame him one bit,” he said.
---With reporting by Josh Fineman in New York. Editors: Steve Dickson, Gregory Mott.
To contact the reporters on this story: Erik Schatzker in New York at eschatzker@bloomberg.net; Christine Harper in New York at charper@bloomberg.net.
Last Updated: March 9, 2009 11:09 EDT
Bloomberg - Thank you for reporting on this ! - I wish we could respond at Bloomberg.
ReplyDeleteI don't have to tell you about how the Glass-Steagall Act was repealed without any input or voting by the general public - I am sure you know.
I think we should be allowed to vote on reinsatetment, a referendum vote, however the $350M invested in 1999 by bankers' and market makers' lobbyists to repeal it originates from the deep and powerful pockets, the pockets of banker market makers who will resist not being able to take the citizen majority's asset-equity, savings & insurance premiums to invest in high risk contracts designed to get high cash bonuses for themselves.
I used to wonder why the bonuses are so high - it is obvious now, any one of these market makers needs $100M, considering that they know the currency will be worth far less - $10M - once they are through playing the market primarily to get cash - not company equity - running the $800 Trillion in no-collateral no-regulation derivatives into the grave, taking away the common person's real-asset equity for themselves.
CDO and CDS contracts and their makers should be indicted as fraudulent contracts and fraudulent traders; these market makers and their markets should have never been allowed to exist, or at least should have been quarentined long ago to fight among themselves and their personal assets.
Best regards, Jeffrey Jasperse