Volker Speaks

President Obama may have finally seen the light. He is considering a recommendation by former Federal Reserve Chairman, Paul Volker, to change the banking regulations to prevent commercial banks (the banks in which you and I deposit our money) from acting also as investment banks. This would in effect restore the Glass-Steagall law that FDR in 1933 put into place.

For 60 years it worked extremely well until 1999 when President Clinton signed into law a bill introduced by Senator Phil Gramm, the "Senator from Enron", that did away with the regulation. This allowed investment banks to merge with commercial banks and use the deposits (yours and mine) as collateral for wild speculation; to gamble in the Wall Street Casinos.

President Reagan, instead of reappointing Paul Volker as Federal reserve Chairman put Alan Greenspan in his place. Reagan and Greenspan saw eye to eye ideologically, i.e. the belief in the laissez-faire free market. Of course the supposed "free market" is free only for Wall Street to steal from Main Street. No regulation encourages banking banditos to commit fraud.

Once the banks are separated, the speculating institutions become responsible for their own losses and cannot rely on the Federal Government to bail them out. Instead, in the future, when a bank collapses, we won't have to try to save it but rather, we can liquidate it in an orderly manner or effect a merger with another bank. As Volker puts it, “euthanasia, not a rescue.”

Nomi Prins, a former Wall Street investment banker and financial expert makes the point that “everyone comes to Wall Street for the money.” With money comes power. “No one comes to Wall Street to help humanity”.

For some, greed may be good but greed also kills. It is killing our country. We need regulations to prevent the dissolution of our economy. We cannot allow continuing “unchecked greed” and the race for endless profits and power. The government should support commercial banking by injecting capital for loans to “ordinary Americans”. It should not support speculators who indulge in casino gambling on the back of middle class money and homes.

As George Carlin said, “It is no longer a game when you are winning.” It is deadly serious. And the monster could destroy us all.


References:

Carlin, George.
Ivins, Molly.
Prins, Nomi. It Takes A Pillage. 2009
Prins, Nomi. Other People's Money. 2004
Scheer, Robert. Truth Dig. 2010