Glass-Steagall: How About Some "Shock & Awe" for Wall Street?

Discussion in 'Stock Market' started by hvactec, Jun 23, 2012.

  1. hvactec
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    hvactec VIP Member

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    Harlan Ullman, regarded as the author of the "shock & awe" military doctrine, is now calling for restoration of Glass-Steagall. In a UPI column, Ullman notes that "Financial markets and global economies are far from recovered and remain vulnerable to massive disruption." He goes on to say, "if this country were serious about making effective reforms to its financial system, three actions will accomplish that aim." These are: "The first is to reinstate and modernize the Glass-Steagall Banking Act of 1933 that separated commercial and investment banking. Second is to regulate by limiting (or banning) credit default swaps and Collateralized Debt Obligations. And third is to ensure that all publicly listed financial firms have an independent chairman who isn't an officer of the company."

    Roddy Boyd, the author of Fatal Risk: A Cautionary Tale of AIG's Corporate Suicide, was interviewed on ValueWalk.com. When he was asked about what role regulation and deregulation played in the AIG collapse, Roddy answered:

    "With respect to regulation, I think it is best to note the authorities are almost always four beats behind what Wall Street is doing. Why Glass-Steagall was so important, or rather, why its elimination in November 1999 was a crucial event, was that it took away the single most important check and balance ever placed on Wall Street. When commercial banks — funding overnight via the Fed, thus, with little short-term capital constraint — were allowed to aggressively build up risk-based assets, the pressure valves were removed from the equation. Traditionally, investment banks had capital constraints and were unable to operate with high leverage for sustained periods... To compete with JPMorgan Chase & Co., Citigroup Inc., and Bank of America Corp. — who had gobbled up I-banks and had adopted their risk-oriented cultures — Lehman, Bear Stearns and Merrill Lynch ran at 30 times their equity capital (and often more). Much hilarity did not ensue. Assessing the wreckage of it all, we should be gimlet-eyed and acknowledge that B of A and Citigroup Inc. would have collapsed without government rescue (as would Merrill Lynch and AIG of course; a credible argument could be made that Goldman Sachs would have gone as well.)"

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  2. California Girl
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    The scrapping of Glass-Steagal was one of the dumbest political decisions, and was one of the main reasons why we are in such a mess. Which President was responsible for that little clusterfuck?

    Clinton.
     
  3. Mad Scientist
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    Mad Scientist Deplorable Gold Supporting Member Supporting Member

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    A Republican Congress pushed it through THEN Clinton signed it.
     
  4. California Girl
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    California Girl BANNED

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    Yea, I know.... but, since the Dems are blaming Bush for every ill since God was a boy, I figured I'd work to their 'blame rule'.

    This bi-partisan fuck up is the reason I say that both parties are responsible.
     
  5. Billo_Really
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    Billo_Really Litre of the Band

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    Clinton was a closet neocon and Phil Gramm was a piece of shit.
     
  6. HUGGY
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    HUGGY I Post Because I Care Supporting Member

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    Glass-Steagall: How About Some "Shock & Awe" for Wall Street?

    How about some RICCO convictions and prison time?
     

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