Glass-Steagall is the indispensable first step to global economic recovery. It will immediately halt the onset of hyperinflation, remove government commitment from bailing out toxic debts, end too-big-to-fail banks, and force a separation of commercial banking functions from investment banking functions, thus cleaning up the nation's banking system to make way for real, long-term investments.

There are now two bills in each house calling for the restoration of President Roosevelt's 1933 Glass-Steagall law. H. R. 129 & its Senate companion bill S. 985, introduced by Rep. Marcy Kaptur and Senator Tom Harkin respectively, and most recently, S. 1282, known as the "21st Century Glass-Steagall Act," championed by Senator Elizabeth Warren, whose companion House bill, H.R. 3711 was recently introduced on December 11, 2013.


Fears about the impact of QE and the awful state of the banks could be "likely to reopen the U.K.'s debate about the need to impose a Glass-Steagall split between retail-commercial banks, where firms and households store their deposits, and investment banks, which take big risks,"...

"Are your deposits safe in banks? No," he writes.

The Federal Reserve released on March 25 a series of papers written by its researchers at the New York and Minneapolis Federal Reserve Banks. Most publicized in the media is a paper by a New York Fed research team, which finds that the dozen largest U.S.-based banks continue to have a "cost of funds" advantage over regional banks and community banks, amounting to ..3 to .4%.

Because of the deepening depression of the European banking system, shrinking bank credit and the near-term failure of perhaps a fifth of Europe's major banks, resistance to Fed-style quantitative easing by the ECB is crumbling, even in the German Bundesbank.

The Federal Reserve did its best to fake its latest stress tests of the major banks, issuing releases which had the financial press last Friday announcing But by the time all the results dribbled out by Tuesday Mar. 25, it wasn't just Zions Bancorp which had failed.

The New York Federal Reserve Bank has released publicly a series of reports showing that the too-big-to-fail banks have benefited from special privileges denied to smaller commercial and regional banks.

Standard and Poors warned all major European banks Wednesday that they can expect to have their bond ratings downgraded as the result of the European Union decision to go for a bail-in policy under the new Single Resolution Mechanism. Fitch is also expected to issue a report with a similar downgrading as early as next week.

The EU reached a "final solution" to the Euro banking system bankruptcy yesterday after an all-night session. German Finance Minister Wolfgang Schaeuble was drawn into the talks around 5:30 a.m. to sign off on the deal.

On Friday the Federal Deposit Insurance Corporation filed suit against 16 of the world's mega-banks, and against the British Banks' Association, for colluding to rig the interest-rate-reference figure, the Libor (London Interbank Offered Rate).

In an interview with The Nation, March 7, Independent Sen. Bernie Sanders of Vermont spoke at length about his willingness to run for President of the US in 2016 because of the miserable state of politics in the U.S.

How It Works

Since 1999, banks have been allowed to use commercial deposits and assets as fuel for securities trading on the derivatives market.

Because commercial and speculative assets are so heavily comingled, the government is forced to protect the assets of banks making risky bets through near perpetual bailouts and purchasing of toxic debt.

It was the derivatives bubble that blew up the system and bankrupted the US banks in the 2007-2008 crash.

1. Commercial Banking institutions have one year to divest themselves of all non-commercial banking units, with no cross management or ownership between commercial and non-commercial units.

2. Commercial Banks are barred from using more than 2% of its capital for the creation, sale, or distribution of securities (certain bank-qualified securities are exempted)

3. Prevents Commercial Banks from loaning their commercial deposits into such vehicals as would support the creation and circulation of securities.

4. No securities of low or potentially low value can be placed by a bank into its insured commercial bank units.

* Adds provision stating Glass-Steagall is the preeminant regulator of the banks, limiting banks from putting its depositors and shareholders at risk.

Glass-Steagall forces separation of commercial from investment banks, it ends Too Big To Fail, bars government bailouts, and will stop the onset of hyperinflation.