Rolf Englund IntCom internetional
Talk from the Trump administration about restoring some kind of modern-day Glass-Steagall,
A revival of the law, which was effectively repealed in 1999, could count on support on both sides of the aisle, and would in theory slice JPMorgan, Citi and BofA in two.
Shares in the banks have soared since the Republicans’ sweep of the White House and both houses of Congress in November, partly on hopes that new people at the helm of regulatory agencies would relax crisis-hardened rules on capital and liquidity.
Glass-Steagall was one of the most successful financial laws Congress has ever enacted.
The financial crisis made people on both the left and the right aware of the “too big to fail” problem
Michel Barnier, EU:s kommissionär för den inre marknaden, väntas inom kort lägga fram ett förslag om bankuppdelning baserat på idéer från Erkki Liikanen
Enligt Erkki Liikanen, som har publicerat den så kallade Liikanen-rapporten, räcker inte ökade kapitaltäcknings- och likviditetskrav. De europeiska bankerna bör även delas upp i två delar, där den traditionella bankverksamheten separeras från tradingen.
På så vis skulle bland annat banker med garanterade insättningar förbjudas att ägna sig åt handel med allt för hög risk, enligt Erkki Liikanen.
Och inom olika europeiska länder pågår redan ett lagstiftningsarbete som syftar till att stycka banker i olika delar. Storbritannien och Frankrike har kommit längre än EU, även om de inte har gått lika långt som Liikanen som pläderar. Han vill ha en total separation.
Thomas Östros befarar att EU-kommissionens förslag blir bindande för EU:s banker.
EU:s finansmarknadskommissionär Michel Barnier förslag gäller de runt trettio största bankerna i medlemsländerna,
Seven Dumb Things Bankers Say
Även de fyra svenska storbankerna kan behöva delas i två olika verksamheter.
Det var i slutet av förra året som Erkki Liikanen, och hans expertgrupp, lade fram den rapport som går ut på att separera bankernas hushållsbankverksamhet från tradingverksamhet.
Orsaken är helt enkelt att skattebetalare inte ska behöva vara med och rädda banker som tar för höga risker för egen räkning.
- Vi har analyserat detta, och kom fram till två alternativa lösningar. Antingen att vi skulle kräva mer kapital för tradingverksamheter, och göra en separation villkorlig.
Det andra var att göra en separation obligatorisk. Efter mycket analys kom vi fram till det senare, säger Erkki Liikanen.
Han vill inte att bankerna ska kunna spekulera med kundernas inlåningspengar, dessutom med vetskapen om att de alltid räddas tack vare deras storlek.
- Därför ska man i stället ha ett holdingbolag, där du har en del med inlåningar, som garanteras, och som fokuserar på utlåning till hushåll och företag. Och en annan del med trading som finansieras via marknaden.
Ett problem för gruppen har varit att reda ut vad som är högriskverksamhet. Skillnaden mellan så kallad proprietary trading (handel för egen räkning) och market making (kunddriven handel) kan ibland vara hårfin. Och framför allt inte alltid lätt urskilja.
---Five years after the financial crisis began, it is still too early to feel sorry for the banks that helped cause it.
For all the complicity of politicians, regulators, investors and customers, the crisis could not have happened without the banks themselves
Patrick Jenkins, the Financial Times’ banking editor, 8 oktober 2012
Banks will be allowed to fail in the future despite facing far more intrusive oversight of their businesses,
The Liikanen review
AT LEAST the lawyers will be happy. Banks are already straining to come to terms with two reforms designed to reduce the risks that investment banks pose to other bits of the banking industry: America’s Volcker rule, which aims to ban proprietary trading (trading for their own profit) by banks; and the Vickers “ring-fence”, which proposes to force British banks to isolate their retail activities from troubl
There is only one real answer - split the banks
The Glass-Steagall divide between commercial banks (that take deposits) and investment banks (that take big risks) was removed in the UK and US in the late 1980s and 1990s. Ever since, financial markets have lurched from crisis to crisis. No other single act did more to cause “sub-prime” and transform it from a banking crisis into a broader fiscal and economic crisis.
Once the depression-era Glass-Steagall legislation was repealed in America in 1999, Wall Street investment bankers were able to use taxpayer-backed deposits to take ultra-risky bets, knowing they would be rescued if their bets went bad.
Unlike commercial banks and retail banks, investment banks do not take deposits.
"And finally, in our progress towards a resumption of work, we require two safeguards against a return of the evils of the old order.
Back in the late 1990’s, in America at least, two schools of thought pushed for more financial deregulation – that is, for repealing the legal separation of investment banking from commercial banking, relaxing banks’ capital requirements, and encouraging more aggressive creation and use of derivatives.
If deregulation looks like such a bad idea now, why didn’t it then?
Confessions of a Financial Deregulator
The Sorrow and the Pity of Another Liquidity Trap
“I would be cheering for the return of the Glass-Steagall Act,”
The government should restrict bank actitivities far more than proposed under the so-called Volcker plan, which would prevent banks from investing for their own accounts, John Bogle, founder of mutual fund giant Vanguard Group, told CNBC
The biggest political story of 2008 is getting little coverage. It involves the collapse of assumptions that have dominated our economic debate for three decades.
You know the talking points: Regulation is the problem and deregulation is the solution. The distribution of income and wealth doesn't matter. Providing incentives for the investors of capital to "grow the pie" is the only policy that counts. Free trade produces well-distributed economic growth, and any dissent from this orthodoxy is "protectionism."
The old script is in rewrite. "We are in a worldwide crisis now because of excessive deregulation," Rep. Barney Frank (D-Mass.), the chairman of the House Financial Services Committee, said in an interview.
He noted that in 1999 when Congress replaced the New Deal-era Glass-Steagall Act with a set of looser banking rules, "we let investment banks get into a much wider range of activities without regulation."
This is the third time in 100 years that support for taken-for-granted economic ideas has crumbled.
What's striking is that conservatives who revere capitalism are offering their own criticisms of the way the system is working. Irwin Stelzer, director of the Center for Economic Policy Studies at the Hudson Institute, says the subprime crisis arose in part because lenders quickly sold their mortgages to others and bore no risk if the loans went bad.
Banks with federally insured deposits, which are limited in the risks they’re allowed to take and the amount of leverage they can take on — have been pushed aside by unregulated financial players.
Never again will the American taxpayer be held hostage by banks that are too big to fail,"
Mr Obama's proposals appear to be a return to the principles underlying the Glass-Steagall Act.
That law - from the 1930s in the aftermath of the Great Depression - separated commercial and investment banking and was eventually abolished in 1999 under President Bill Clinton.
Mr Clinton's financial secretary at the time, Robert Rubin, previously worked at Goldman Sachs and went on to be an adviser to Citigroup until last year.
The cause of our crises has not gone away
Senators John McCain and Maria Cantwell
Those walls came down with passage of the Gramm-Leach-Bliley Act of 1999. A proposal to reconstruct them, made by U.S. Senators John McCain and Maria Cantwell on Dec. 16, would prevent deposit-taking banks from underwriting securities, engaging in proprietary trading, selling insurance or owning retail brokerages. The bill could also force the unwinding of deals consummated during the financial crisis, including Bank of America Corp.’s acquisition of Merrill Lynch & Co.
In 1999, Gramm successfully undid the Depression-era Glass-Steagall Act, removing the decades-old wall between commercial banking, which was heavily regulated, and investment banking, which was not.
Republican presidential candidate Sen. John McCain's national campaign general co-chair was being paid by a Swiss bank to lobby Congress about the U.S. mortgage crisis at the same time he was advising McCain about his economic policy, federal records show.
McCain's chief economic adviser - and perhaps his closest political friend - is the ultimate pure play in free market faith, former Texas Senator Phil Gramm. If McCain follows Gramm's counsel, and most of his current positions are vintage Gramm indeed, his policies as president would represent not just a sharp departure from the Bush years, but an assault on government growth that Republicans have boasted about, but failed to achieve, for decades.