JP Morgan/Chase Fiasco Brings Roars for Glass-Steagall
May 17, 2012 • 9:12AM

As more and more people realize that the JPMorgan/Chase trading losses are just the tip of the iceberg, more calls are being heard for the restoration of FDR's Glass-Steagall law. One noticeable omission in many of these statements is that they do not call for action on HR 1489 — the bill to restore Glass-Steagall that is already introduced in the House. Among the new calls for Glass-Steagall are:

— ST. LOUIS POST-DISPATCH editorial entitled "What was wrong with the Glass-Steagall Act, anyway?" Lamenting the 1999 Gramm-Leach-Bliley act which overturned it, the editorial notes: "Under Glass-Steagall, the nation enjoyed nearly 50 years of prosperity. Commercial banks loaned money. Investment banks did deals. Securities firms sold stocks and bonds. Insurance companies sold insurance. It worked."

After reviewing the 2008 collapse, and how politicians of both parties are beholden to the big banks today, the editorial concludes: "Here's a campaign slogan: Bring back Glass-Steagall. It was good enough for FDR. It was good enough for 50 years of prosperity. The money that is churning through international finance these days is doing just that — churning, creating profits, not jobs. It makes food and fuel and most everything else more expensive. It is an outsized Ponzi-scheme that enriches the few at the expense of the many."

— The website of the AMERICAN BANKER magazine features the story "Elizabeth Warren Calls for New Version of Glass-Steagall."

— ARKANSAS GAZETTE columnist Paul Greenberg asks: "Anybody need still another argument for reviving the old Glass-Steagall Act (1933-99), with its salutary separation between commercial and investment banking? If so, JPMorgan Chase has just provided one. A big one."

— CHICAGO TRIBUNE op-ed by Peter Morici, professor at the University of Maryland's Smith School of Business, who writes that busting up the big Wall St. financial houses may be the only way to ensure financial stability. He thinks that certain exceptions are needed, but says that stable commercial banks are essential to a market economy and for economic growth. "The simplest solution is to once again separate commercial and investment banking, as was required by the Glass-Steagall Act, with some modest exceptions."

The Chicago Tribune also publishes a letter from George Hickey, of Downers Grove, Ill., who writes: "It's amazing how politicians are unwilling to enforce the Glass-Steagall law (the separation of commercial banking from speculative banking), the one regulation that would stop banks from investing the life savings of average Americans in risky deals, and maybe save our nation from further financial ruin."

The SEATTLE TIMES publishes a letter from Don Curtis, of Clinton, Wash., who writes: "The JPMorgan Chase fiasco should be a reminder for us. We simply cannot trust Wall Street to think about anything other than its bottom line. For 50 years or more, the laws were in place keeping Wall Street away from Main Street. It was called the Glass-Steagall Act, and it worked. Congress, ever mindful of the need for more campaign bucks, changed and eventually gave bankers what they wanted, taking Glass-Steagall off the books. Banks and bankers are again spending millions to keep Congress from doing its job. The too big to fail will get their way unless voters make their voices heard. Its the only way our democracy works for all of us."

— TOWNHALL.COM column by Bill Tatro: "Is it just pure coincidence the demise of the U.S. economic system started at the same time as the passage of the Gramm-Leach-Bliley Act of 1999 which effectively eliminated Glass-Steagall?"

— TRUTHOUT runs a blog posting by Nomi Prins entitled "JPMorgan Chase Chairman Jamie Dimon, the Whale Man and Glass-Steagall." Prins says that the JPM/Chase losses will grow, and spread, adding that "there's no such thing as an isolated trading loss anymore." Prins says that "[Jamie] Dimon is right about something, that the Volcker Rule wouldn't necessarily apply to this 'hedge'... Yet, the Volcker Rule will not change one fundamental pillar of global systemic risk — as long as banks are not segregated a la Glass Steagall along deposit-taking/loan- making vs. speculation lines, they will have access to capital to burn. And burn it they will."

Clinton's Labor Secretary Robert Reich continues to campaign for Glass-Steagall, appearing on CNN's "Marketplace" Wednesday afternoon to explain clearly exactly why it is needed now.