“Never in the field of financial endeavour has so much money been owed by so few to so many. And, one might add, so far with little real reform.”
Thus spoke Mervyn King, governor of the Bank of England, on Tuesday night, 20th October, to a group of Scottish
business people. Echoing one of Churchill’s many famous sayings, Governor King is probably one of the highest ranking people around to state, at last, what everyone on the Clapham Omnibus (a London bus route) knows to be obvious. Whether the forces can build to a point where common sense is applied by Governments before we enter another Great Depression is another matter.
Mention of the Great Depression (the last one) triggers a step back in time.
On June 16th 1933 Franklin Roosevelt signed into law the Glass-Steagall Act. In fact that was the second Act signed
into law, the first Act was passed by Congress in February 1932 and was largely designed to stop deflation. The second Act was, in a sense, much more important because it set out to prevent bank holding companies from owning other financial institutions. It was repealed on November 12th, 1999 by the Gramm-Leach-Bliley Act. Just a little under 10 years ago. 10 years which have seen the biggest boom-bust probably ever in modern history. And has much of the Western world slipping into another great depression.
US Senator Carter Glass and US Congressman Henry B. Steagall must be turning in their graves
But thank goodness for investigative journalism and the role of the Internet in creating a truly open ‘meeting place’.
In our Post of the 11th October called The truth about this crisis – and it isn’t pretty, we linked to an interview by Bill Moyers. Bill interviewed Simon Johnson of Baseline Scenario and Democratic Representative Marcy Kaptur. It showed the degree of influence being applied within US Government and the appalling lack of respect for the people of the United States of America.
Now Frontline of PBS has produced a stunning one hour documentary on the efforts of Brooksley Born to introduce regulations and a degree of transparency in the OTC Derivatives market. Assuming that it is factually correct, it is damming!
It’s an hour’s film so something that you will need to set aside time for. But you should. It needs to be watched just like the Bill Moyer’s interview.
Back to Mervyn King. In his speech,he called for banks to be split into separate utility companies and risky ventures, saying it was “a delusion” to think tougher regulation would prevent future financial crises. Precisely!
I trust that this may turn out to be a pivotal moment in getting governments on both sides of the Atlantic to change their views. Let’s face it, the electorate know what makes sense!
As for these chaps …
thanks ….. for nothing!
By Paul Handover
Learning from Dogs 
On the face of it, repealing this act was idiotic, leading to a clear conflict of interest for the banks.
What should have been boring, old traditional High St banks dealing face-to-face with real people got sucked up into the whirlpool of greed and speculation that hedge funds got involved in. And they gambled with OUR money …..
As someone sensible recently said, banking has got to become once again much more boring.
And while I’m on this topic, it is a great shame that the stock market, that wonderful idea where people could invest long-term for their own future and at the same time help to finance the development of companies has degenerated into what to the layman seems like one giant gambling casino, where shares are bought and sold in seconds, or even milliseconds, as I believe is now the case by the first-league players such as Goldman-Sachs (hence their vast profits).
This is greed and gambling masquerading as good business. It has to change …. is there any sign that it really is?
I have an idea ….. why not make it illegal to own shares for less than a week ….. that would take the frenzy and much of the gambling aspect out of it all. I look forward to someone telling me this is impossible, and explaining exactly why!!
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