Tag: Elizabeth Warren

Feb 08

Republican Racism On Full Display

Last night, during the debate to confirm racist Alabama Senator Jefferson Beauregard Sessions to be US Attorney General, the good Democratic senator from Massachusetts and former Harvard law professor, Elizabeth Warren was silenced when she started reading the late Coretta Scott King letter that opposed Sessions nomination to the federal court. Senate Majority Leader Mitch …

Continue reading »

Oct 02

Rant of the Week: Stephen Colbert – Go Stumpf Yourself

Last week the CEO of Wells Fargo, John Stumpf appeared before the Senate Banking Committee and got roasted by Senator Elizabeth Warren (D- MA). CBs’s “The Late Show ” host Stephen Colbert elaborated that if you’re a fan of the big banks, you won’t like this story.

May 12

Liz Warren’s Twitter War with Drumpf

Presumptive nominee and name calling bully, Donald “Drumpf” Trump took the wrong person on in a Twitter battle when he started calling Massachusetts Senator Elizabeth Warren goofy. She didn’t sit back she took him to the principal’s office. Drumpf is a sexist, racist, clueless dolt who has no idea how government works or just how …

Continue reading »

Apr 06

Senator Doctor Warren Schools A GOP Witness

At the Senate Banking Committee hearing on Tuesday, titled “Assessing the Effects of Consumer Finance Regulations,” Senator Elizabeth Warren (D-MA) took a former Federal Reserve deputy director to the woodshed on his role in the run-up to the 2008 fiscal crisis. The Republicans’ lead witness Leonard Chanin, former Deputy Director of the Division of Consumer …

Continue reading »

Sep 30

Elizabeth Warren Said What We Needed To Hear

In an address at Edward M. Kennedy Institute for the United States Senate in Boston, established by her late predecessor, Sen. Ted Kennedy, Sen. Elizabeth Warren (D-MA) got to the heart of the Black Lives Matter movement and what everyone should be doing to end racial inequality.

Transcript for the speech as it was written can be read here

Aug 14

Social Security at 80

80 years ago today President Franklin D. Roosevelt signed the Social Security Act as a major part of his New Deal. Calls for its privatization started over 30 years ago under Pres. Gerald Ford. We must not let that happen. If anything, it should be expanded as Senators Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) proposed.

Sen. Warren sent an e-mail today reminding us of the vital importance of this program to seniors, the disabled and dependent children:

80 years ago today, President Franklin D. Roosevelt signed the Social Security Act into law – and it was in large part thanks to a remarkable woman from Massachusetts: Frances Perkins.

Frances Perkins was FDR’s Secretary of Labor – the first woman in US history to hold a cabinet position. Coming out of the Great Depression, she was a chief architect of the New Deal, and we can thank her for the 40-hour workweek, the minimum wage, and unemployment insurance. She was also the head of the Committee on Economic Security, which created the blueprint for Social Security. God bless Frances Perkins.

FDR and Frances Perkins established Social Security because, as FDR said, “It [would] take care of human needs and at the same time provide for the United States an economic structure of vastly greater soundness.” In other words, Social Security would be a win-win: good for our nation’s economy and good for the citizens of our nation.

They knew that Social Security was about economics, but it was also about our values. It’s about who we are as a people, and what kind of country we are determined to build. [..]

80 years later, we need Social Security more than ever. People are hitting their retirement years with less savings and more debt. Pensions are disappearing, being replaced by 401(k) plans that leave retirees at the mercy of the stock market. The squeeze on America’s middle class is now a squeeze on America’s retirees.

Social Security benefits are modest – just $1300 a month, on average – but two-thirds of America’s seniors rely on those checks for the majority of their income. For 15 million seniors, Social Security is all that stands between them and poverty.

Social Security is about independence and dignity. It’s no surprise that 79% of likely voters in last year’s election – Democrats, Republicans, and Independents – support increasing Social Security benefits. Every person who represents you in Washington, and every person running for President in 2016, should be talking about protecting and expanding Social Security – not cutting it.  

FDR and Frances Perkins knew that you don’t get what you don’t fight for. So today, I’m fighting hard to make sure we don’t cut a dime of Social Security benefits. I’m fighting to protect and expand Social Security – and I hope you’ll fight alongside me.

Decades after Social Security was established, Frances Perkins told the Social Security Administration:

Social Security is so firmly embedded in the American psychology today that no politician, no political party, no political group could possibly destroy this Act and still maintain our democratic system. It is safe. It is safe forever, and for the everlasting benefit of the people of the United States.

Let’s fight to make good on Frances Perkins’ promise by protecting and expanding Social Security.

Thank you for being a part of this, and a special thanks to Frances Perkins – a tough woman with a vision. Happy birthday, Social Security!

Elizabeth

She asks us to sign her petition to protect and expand Social Security:

Two-thirds of seniors rely on Social Security for the majority of their income in retirement, and for 15 million seniors – 15 million – this is the safety net that keeps them out of poverty. And yet, instead of taking on the retirement crisis, instead of strengthening Social Security, some in Washington are actually fighting to cut benefits.

The absolute last thing we should do in 2015 – at the very moment that Social Security has become the principal lifeline for millions of our seniors to keep their heads above water – is allow the program to begin to be dismantled inch by inch.

Join me today – on the 80th anniversary of Social Security – to take a stand: We believe in protecting and expanding Social Security so our seniors can retire with dignity.

We stand with Sen. Warren. Please sign her petition

Dec 18

Equal Employment Regardless of Credit Score

Cross posted from The Stars Hollow Gazette

In a press release, Massachusetts Senator Elizabeth Warren along with five other Senate Democrats announced the introduction of legislation to end the practice of some employers to require a job applicant to disclose their credit rating.

Senator Warren Introduces Legislation to Prohibit Employers from Requiring Credit Report Disclosure

Dec 17, 2013

Fact Sheet is Available Here (pdf)

Text of the Legislation is Available Here (pdf)

Washington, DC – United States Senator Elizabeth Warren (D-Mass.) today introduced the Equal Employment for All Act with Senators Richard Blumenthal (D-Conn.), Sherrod Brown (D-Ohio), Patrick Leahy (D-Vt.), Edward J. Markey (D-Mass.), Jeanne Shaheen (D-N.H.), and Sheldon Whitehouse (D-R.I.). The legislation would prohibit employers from requiring potential employees to disclose their credit history as part of the job application process. It was previously thought that credit history may provide insight into an individual’s character, but research has shown that an individual’s credit rating has little to no correlation with his or her ability to be successful in the workplace.

“A bad credit rating is far more often the result of unexpected medical costs, unemployment, economic downturns, or other bad breaks than it is a reflection on an individual’s character or abilities,” Senator Warren said.  “Families have not fully recovered from the 2008 financial crisis, and too many Americans are still searching for jobs. This is about basic fairness — let people compete on the merits, not on whether they already have enough money to pay all their bills.”

A study from the Federal Trade Commission earlier this year suggested that errors in credit reports are common and, in many cases, have been difficult to correct.  “It makes no sense to make it harder for people to get jobs because of a system of credit reporting that has no correlation with job performance and that can be riddled with inaccuracies,” Warren said. [..]

Senator Warren’s bill is based on H.R. 645, which was introduced by Congressman Steve Cohen (TN-9) in 2011.

Sen. Warren joins the host of MSNBC’s “All In” Chris Hayes to talk about her bill to stop employers from using an applicant’s credit score in the vetting process.

Take Action and sign the petition to support Equal Employment for All Act and end the practice of denying employment based on credit scores,

Nov 20

Retirement in Crisis

Cross posted from The Stars Hollow Gazette

Increasingly over the last few months the sensible people of congress have gotten on board with the idea that Social Security should be expanded. With the failure of many 401k’s and inadequate pension funds, many seniors and future retirees are more reliant on Social Security for a substantial part of their retirement plans. Senators Tom Harkin (D-Iowa), Bernie Sanders (I-Vt.), and Sherrod Brown (D-Ohio) have proposed that instead of switching to a “chained” consumer price index that cuts retiree benefits, the nation should adopt CPI-E, which measures the actual cost of living for the elderly and would raise benefits to meet actual needs.

The latest to voice support for this idea is Massachusetts Senator Elizabeth Warren who took to the Senate floor to criticize the Washington Post‘s editorial that said  called expanding Social Security “wrongheaded” and suggested the nation should instead be more concerned about the higher percentage of children living in poverty. Sen. Warren called this the “uglier side” of the debate on Social Security.

Floor Speech by Senator Elizabeth Warren (pdf)

The Retirement Crisis

November 18, 2013

As Prepared for Delivery

(Mr./Madame) President, I rise today to talk about the retirement crisis in this country – a crisis that has received far too little attention, and far too little response, from Washington.

I spent most of my career studying the economic pressures on middle class families – families who worked hard, who played by the rules, but who still found themselves hanging on by their fingernails. Starting in the 1970s, even as workers became more productive, their wages flattened out, while core expenses, things like housing and health care and sending a kid to college, just kept going up.

Working families didn’t ask for a bailout. They rolled up their sleeves and sent both parents into the workforce. But that meant higher childcare costs, a second car, and higher taxes. So they tightened their belts more, cutting spending wherever they could. Adjusted for inflation, families today spend less than they did a generation ago on food, clothing, furniture, appliances, and other flexible purchases. When that still wasn’t enough to cover rising costs, they took on debt credit card debt, college debt, debt just to pay for the necessities. As families became increase singly desperate, unscrupulous financial institutions were all too happy to chain them to financial products that got them into even more trouble — products where fine print and legalese covered up the true costs of credit. These trends are not new, and there have been warning signs for years about what is happening to our middle class. One major consequence of these increasing pressures on working people – a consequence that receives far too little attention – is that the dream of a secure retirement is slowly slipping away.

A generation ago, middle – class families were able to put away enough money during their working years to make it through their later years with dignity. On average, they saved about 11% of their take home pay while working. Many paid off their homes, got rid  of all their debts, and retired with strong pensions from their employers. And where pensions, savings, and investments fell short,

they could rely on Social Security to make up the difference. That was the story a generation ago, but since that time, the retirement landscape has shifted dramatically against our families. Among working families on the verge of retirement, about a third have no retirement savings of any kind, and another third have total savings that are less than their annual income. Many seniors have seen their housing wealth shrink as well. According to AARP, in 2012, one out of every seven older homeowners was paying down a mortgage that was higher than the value of their house.

While President Barack Obama and House Minority Leader Nancy Pelosi have expressed their support for cuts to Social Security as part of a budget agreement to trim the deficit, which Social Security does not contribute to, most Democrats wisely have said ruled that out in the current debate talks. We need to make sure that any cuts to the Social Security benefits of our most vulnerable citizens is taken off the table permanently.

 

Oct 12

Congressional Game of Chicken: Warnings on Default

Cross posted from The Stars Hollow Gazette

There are a few fools in the House and Senate who don’t understand the consequences of the US defaulting on its debt payments. Flirting with default is not an option to solve a budget impasse. It’s a recipe for global financial disaster.

The right’s antics could cause a Depression: The terrifying default aftermath

by David Dayen, Salon

Normally with a financial crisis, there’s at least agreement on the need for a response. Not with these lunatics

The biggest threat from the twin calamities of the government shutdown and the debt limit breach is not actually the real-world effect; it’s what happens the next day, and the day after that. In other words, the most frightening thing about default, which is much more problematic than the shutdown, is what happens afterward. [..]

And all of these outcomes pale in comparison to what would happen if the government defaulted on any of its debts. Put the misguided statements of debt limit denialist Republicans aside. Based on current cash on hand at the Treasury Department, roughly 32 percent of the funds owed (pdf) between Oct. 18 and Nov. 15 would have to go unpaid. That’s a massive reduction in federal spending, and would cause a significant hit to Gross Domestic Product. Prioritization of payments, which may be unconstitutional, would certainly be a logistical nightmare, forcing Treasury to rewire its payment system (pdf) and pick and choose between up to 100 million monthly invoices.

If one of the missed payments is to a holder of U.S. debt, then you have a default event that could cause credit markets to freeze, the U.S. dollar to plummet, and financial institutions to struggle to secure short-term lending on which they rely. With the dollar and the U.S. Treasury bond serving as a benchmark for world markets, Businessweek says that the resulting global apocalypse would dwarf the implosion of Lehman Brothers that precipitated the 2008 financial crisis. And it would injure the perceived stability of U.S. debt maybe forever, raising our borrowing rates as investors decide a country that threatens to default for no good reason isn’t worth putting their money into. [..]

Armed with the knowledge that Congress won’t meaningfully help recover the economy, the White House needs to think very hard about forsaking the various options they could use to try and avert a debt default. It’s not just that the alternative is a disaster; it’s a prolonged disaster.

IMF piles pressure on US to reconcile differences and prevent debt default

by Larry Elliot and Jill Treanor, The Guardian

Shares and oil prices rise in hope of six-week extension as OECD warns US deadlock threatens world economy

The International Monetary Fund and the Organisation for Economic Cooperation and Development both issued sharply worded warnings to Republicans and Democrats amid signs that America’s Asian creditors were becoming alarmed at the potential consequences of the impasse. [..]

Speculation about a deal emerged after Jack Lew, the US Treasury secretary said there would be chaos if the US defaulted – a message rammed home by the IMF’s Christine Lagarde and the OECD’s secretary general Angel GurrĂ­a.

Lagarde, the IMF’s managing director, said there would be very dangerous consequences for the US economy and very dangerous consequences outside the US economy if the default was not prevented.

She distanced herself from the infighting in Washington, noting: “The IMF does not make recommendations about how, politically, this can be resolved. We don’t take a political view. We just look at the economic consequences.

“When it affects the largest economy in the world, we are bound not only to look at the immediate domestic consequences but at what happens elsewhere, so that we can have a dialogue with our members to help them prepare. I hope we will be able to look back in a few weeks and say what a waste of time that was. But we have to look at the risks no matter how unlikely they are to materialise.”

On Wednesday, Massachusetts Senator Elizabeth Warren addressed the Senate warning that “this is no time to act out dangerous fantasies.

“We’re in this position for one reason, and one reason only: because Congress told the government to spend more money than we have – and Congress told the Treasury to run up our debt to pay for it – but now Congress is threatening to run out on the bill,” Senator Warren said.  “…The idea that we can somehow renege on our debts without paying a huge price is a fantasy-and a very dangerous one.” [..]

“This fight is about financial responsibility. Financially responsible people don’t charge thousands on their credit cards and then tear up the bill when it arrives. Financially responsible nations don’t either….If we default on our debt, we could bring on a worldwide recession-a recession that would pummel hard-working middle class people, people who lost homes and jobs and retirement savings and who are barely getting back on their feet,” said Warren.

Talks between White House and Republicans fail to end US shutdown

by Dan Roberts, The Guardian

Hopes that a deal might be in sight disappear as Barack Obama and House speaker John Boehner fail to see eye to eye

Discussions between Barack Obama and House speaker John Boehner broke up after 90 minutes with little apparent progress, although there was a marked change in tone on both sides that suggests a deal could still be close. [..]

But the Republicans refused to lift a separate threat to spending authorisation, which has led to a partial shutdown of the government since 1 October.

Obama had insisted on at least a temporary reprieve from both threats before he would agree to negotiate over Republican demands to repeal his healthcare reforms and cut spending.

On Thursday night, it appeared the president had chosen to stand his ground and may have initially refused to accept the partial climbdown from Boehner.

The game continues and no one is hitting the brake.

Sep 19

Be Careful What You Ask For

Cross posted from The Stars Hollow Gazette

The progressive Democrats of the Senate got Larry Summers to withdraw from consideration for chair of the Federal Reserve over the weekend. So now they’re yellin’ for Yellen. Well, folks Janet Yellen the current vice chair of the Federal Reserve is just the distaff version of Larry minus he misogyny.

Huffington Post‘s senior political economy reporter Zach Carter gives a rundown of Ms. Yellen’s policy history before and during her tenure as chair of Council of Economic Advisers in the Clinton administration. During that time she backed the repeal of the landmark Glass-Steagall bank reform, supported the 1993 North American Free Trade Agreement and pressured the government to develop a new statistical metric intended to lower payments to senior citizens on Social Security. Yes, dears, that last one would be an earlier version of the Chained CPI.

But in the 1990s, Yellen and Summers both served in the Clinton administration, and pursued many of the same policies. Yellen began serving as Chair of President Bill Clinton’s Council of Economic Advisers in 1997, and publicly endorsed repealing Glass-Steagall’s separation between traditional bank lending and riskier securities trading during her Senate confirmation hearing. Yellen referred to deregulating banking as a way to “modernize” the financial system, and indicated that breaking down Glass-Steagall could be the beginning of a process allowing banks to merge with other commercial and industrial firms. [..]

At the same event, Yellen endorsed establishing a new statistical metric that would allow the federal government to reduce Social Security payments over time, by revising the consumer price index, or CPI, the government’s standard measurement for inflation. [..]

Before Yellen joined the Clinton administration, she was a respected economist at the University of California at Berkeley. In 1993, she joined dozens of other academics in signing a letter to Clinton advocating for the North American Free Trade Agreement. The letter was signed by prominent conservative economists including Milton Friedman, but also by many economists who are now considered progressive, including Paul Krugman and former Obama adviser Christina Romer. Krugman has since expressed disappointment with some of the trade pact’s effects.

(all emphasis mine)

The full transcript of Ms. Yellen’s Feb. 5, 1997 conformation hearing can be read here (pdf).

To be fair on the Glass-Steagall repeal, Ezra Klein weighed in at his Washington Post Wonkblog:

Another point here is that Glass-Steagall really wasn’t behind the crisis. Wonkblog’s Glass-Steagall explainer has much more detail on this, but perhaps the simplest way to make the point is to quote Sen. Elizabeth Warren, the lead sponsor behind the bill to restore Glass-Steagall. When Andrew Ross Sorkin asked her whether the law would’ve prevented the financial crisis or JP Morgan’s subsequent losses, she said, “the answer is probably ‘No’ to both.” There are good reasons to bring back Glass-Steagall, but they’re separate from the events of 2007 and 2008.

Which is only to say that supporting the repeal of Glass-Steagall in 1997 doesn’t say that much about somebody’s opinions on regulating Wall Street today. And, in general, we don’t know very much about Janet Yellen’s views on the subject. As I’ve argued before, the support for her on this dimension (as opposed to on the monetary policy dimension) really comes from an anybody-but-Summers impulse.

Carter also noted in his article that Ms. Yellen is more consumer friendly. During her tenure as president of the San Francisco Federal Reserve from June 14, 2004 until 2010, she identified the housing bubble and urged stronger regulation to limit its damage.

This still leaves a lot of questions about whether she would support the chained CPI, that is very unpopular among seniors and the public in general, or support regulation to rein in the TBTF banks. As lambert at Corrente puts it:

“Be careful what you wish for; you might get it” was made for situations like this.

So let’s not confuse a solid base hit with a game-winning grand slam, OK?

Sep 18

Long Term Paybacks

Cross posted from The Stars Hollow Gazette

A long time ago, after an incident that had left me particularly furious with a disagreeable colleague, a friend told me to be patient eventually this person would fall on his own petard. After all, it wasn’t the short term paybacks that one needs to worry about, its the long term paybacks that get them in the end. And so it was, some years later, my nemesis got too arrogant, made some foolhardy decisions and was forced to retire in disgrace. I had long since moved on another path that was ultimately more satisfying but when I heard the story of his fall I had to wryly smile.

Over the weekend, after some weeks of speculation about who would succeed Ben Bernanke as chair of the Federal Reserve, President Barack Obama’s rumored favorite, his former chief economics adviser, Larry Summers, withdrew his name from consideration. Mr. Summers had come under fire from the progressive left for his Chicago School economic policies and his past history as President Bill Clinton’s Treasury Secretary. It was during Summer tenure as Treasury head that Glass-Steagal was repealed leading to the current economic mess. Add to that his misogynistic attitude and the rise of one of the women to whom he was so dismissive and you have the recipe for the down fall of one of the most “dickish” (Charlie Pierce’s term) personalities in government.

Washington bureau chief for The Huffington Post Ryan Grim summarized Larry’s fall from grace:

A progressive-populist coalition fueled by women’s groups and high-end donors was responsible for undoing President Barack Obama’s bid to install Larry Summers as the next chairman of the Federal Reserve. [..]

The five opposing senators were a combination of traditional progressives — Merkley, Elizabeth Warren (Mass.) and Sherrod Brown (Ohio) — and prairie populists — Jon Tester (Mont.) and, according to three Senate Democratic sources, Heidi Heitkamp (N.D.). Tester’s opposition was reported Friday by Reuters; Heitkamp’s intention was not previously public. [..]

Meanwhile, a coalition of progressive groups — which included UltraViolet and the National Organization for Women, two powerful women’s groups — teamed with the big donors and grassroots advocacy groups to pressure Banking Committee members and other Senate Democrats. ..]  The donors, who were mostly women, had [concerns that ranged from populist to feminist. [..]

Merkley, according to another aide, spoke to Democratic senators on the committee during caucus meetings on Tuesday and Thursday, and made Summers’ closeness to Wall Street and prior support for deregulation the key element of his pitch. He homed in on Summers’ backing for the Glass-Steagall repeal, which allowed banks to grow much larger and take on more risk. He also highlighted Summers’ opposition to regulating derivatives in a battle with then-Commodity Futures Trading Commission head Brooksley Born. Summers took both positions as treasury secretary during the Clinton administration. To make the point that Summers had not revised his approach, Merkley noted his intense behind-the-scenes opposition to the Volcker Rule, an attempt to reinstate some of Glass-Steagall’s restrictions that was added to the Dodd-Frank Wall Street reform law by Merkley and Brown. [..]

Summers had also opposed naming Warren to permanently head the Consumer Financial Protection Bureau, a decision that came back to haunt him, as Warren instead ran for the Senate and won a spot on the Banking Committee, where she has now helped tank Summers’ shot at the Fed chairmanship.

Essentially, Larry Summers was the author of his own demise. As Charlie Pierce observes:

The fact is that Senator Professor Warren was one of the driving forces behind a genuine populist uprising of liberal Democratic senators — and Jon Tester, too — and that uprising has kicked Larry Summers to the curb. She has quietly carved out a leadership role in the one area in which she is an acknowledged expert. (What she will do if it ever comes to a vote on making war in Syria is anybody’s guess.) Quite simply, she is doing what she said she would do when she was running for the Senate. She has enough allies to get done a lot of what she wants to get done. Anything this president — or his successor — wants to do as far as national economic policy now has to go through her, and through the coalition to which she belongs. I still don’t think the president will nominate Janet Yellin — He’s got his back up about it now — but whoever he does nominate is going to have to have a chat with the nice professor in the glasses who’s got just a few questions she’d like to ask.

I’m sure there are a lot of women, from Brooksley Born to Christina Romer, wryly smiling. Long term paybacks can be very satisfying.

Jul 17

Sen. Warren Revives Glass-Steagall, Break up TBTF

Cross posted from The Stars Hollow Gazette

Last week Sen Elizabeth Warren (D-MA), along with Senators John McCain (R-Ariz.),  Sens. Maria Cantwell (D-Wash.) and Angus King (I-Maine), introduced legislation that rein in the excesses of the Too Big Too Fail banks. The bill would require banks that accept federally insured deposits to focus on traditional lending and would bar them from engaging in risky securities trading. It would also bar banks that accept insured deposits from dealing swaps or operating hedge funds and private equity enterprises.

The legislation introduced today would separate traditional banks that have savings and checking accounts and are insured by the Federal Deposit Insurance Corporation from riskier financial institutions that offer services such as investment banking, insurance, swaps dealing, and hedge fund and private equity activities. This bill would clarify regulatory interpretations of banking law provisions that undermined the protections under the original Glass-Steagall and would make “Too Big to Fail” institutions smaller and safer, minimizing the likelihood of a government bailout.

“Since core provisions of the Glass-Steagall Act were repealed in 1999, shattering the wall dividing commercial banks and investment banks, a culture of dangerous greed and excessive risk-taking has taken root in the banking world,” said Senator John McCain. “Big Wall Street institutions should be free to engage in transactions with significant risk, but not with federally insured deposits. If enacted, the 21st Century Glass-Steagall Act would not end Too-Big-to-Fail.  But, it would rebuild the wall between commercial and investment banking that was in place for over 60 years, restore confidence in the system, and reduce risk for the American taxpayer.”

“Despite the progress we’ve made since 2008, the biggest banks continue to threaten the economy,” said Senator Elizabeth Warren.  “The four biggest banks are now 30% larger than they were just five years ago, and they have continued to engage in dangerous, high-risk practices that could once again put our economy at risk.  The 21st Century Glass-Steagall Act will reestablish a wall between commercial and investment banking, make our financial system more stable and secure, and protect American families.”

Five Facts About the New Glass-Steagall

by Simon Johnson, Bloomberg The Ticker

Naturally, Wall Street will respond with a huge disinformation campaign, saying that the bill would cause the sky to fall. As the debate intensifies, keep in mind the following five points.

1) The bill would actually help small banks, because it would force the taxpayer-subsidized megabanks and related financial companies to break up. [..]

2) The simplifying intent of the 21st century Glass-Steagall Act is complementary to other serious reform efforts underway, including plans for the “resolution,” or managed liquidation, of any financial firm that fails. [..]

3) Proponents of big banks will claim that the breakdown of the original Glass-Steagall Act (which separated commercial and investment banking) did not contribute to the crisis of 2007-08. [..]

4) As the preamble to the 21st century Glass-Steagall Act points out, it represents a convergence with European reform thinking, as seen in the Vickers Report (for the U.K.) and the Liikanen Report (for Europe more broadly). [..]

5) The Treasury Department is not going to welcome the legislation — in fact, it may assist in mobilizing opposition. At this stage, this is an advantage, not a problem. Treasury has a severe case of reform fatigue. It’s time for someone else to carry the ball.

Remember Citigroup

by Simon Johnson, Huffington Post

The strangest argument against the Act is that it would not have prevented the financial crisis of 2007-08. This completely ignores the central role played by Citigroup.

It is always a mistake to suggest there is any panacea that would prevent crises — either in the past or in the future. And none of the senators — Maria Cantwell of Washington, Angus King of Maine, John McCain of Arizona, and Elizabeth Warren of Massachusetts — proposing the legislation have made such an argument. But banking crises can be more or less severe, depending on the nature of the firms that become most troubled, including their size relative to the financial system and relative to the economy, the extent to which they provide critical functions, and how far the damage would spread around the world if they were to fall.

Executives at the helm of Citigroup argued long and hard, over decades, for the ability to expand the scope of their business — breaking down the barriers between conventional commercial banking and all of forms of financial transactions, including the most risky. In effect, the decline of the restrictions established by the original Glass-Steagall — at first gradual but ultimately dramatic — allowed Citigroup to increase the scale and complexity of gambles that it could take backed by deposits and ultimately backed by the government.

What are the chances of this bill getting passed? Probably not all that good considering the Wall St. cronies like Sen. Chuck Schumer (D-NY) who most certainly oppose it. Even if it makes it through the Senate relatively intact in intent, the wild children in the House will most certainly kill it. We need more Liz Warrens in both houses of congress.

Load more