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Complete Text of the Glass-Steagall Act

March 29, 2010
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Go shake it at your Congressperson.

We need a new one.

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27 Comments leave one →
  1. Stemella permalink*
    March 30, 2010 8:57 am

    Good job ! I’ve posted this as a link in our blogroll for permanent quick reference once this post scrolls off. It is also good to know that Scribd works here. Could be handy in the future.

    Now to read the thing.

    And just in case Mr. Taibbi shows up I would like to give him a huge high fucking five, for all his great squidly contributions and for skewering the ratfuckers at Goldman with such wonderful linguistic acrobatics. :-)

  2. cometman permalink*
    March 30, 2010 9:24 am

    Here are some extremely good arguments for why we need a new Glass-Steagall Act and other regulation like the Consumer Financial Protection Agency.

    And let’s not forget it was under Democratic president Bubba Clinton that the original Act was gutted so beware of weasel words from the weak kneed Democrats in Congress (and republicans too-kind of goes without saying) now pushing for “reform”.

    From Allen Farago – An Economy Without Firewalls.

    Lennar and LNR are part of a network of large financial institutions that lobbied expensively and extensively for the prerogatives of the “free market” over many decades. The visible benefits include a provision supported by the Obama White House in 2009 legislation that allows homebuilders to write off current losses– billions– against profits during the building boom. LNR, like most of Wall Street, is surviving through an accounting rule change recently approved by Congress that gives the nation’s largest financial institutions (ie. the issuers of debt owned by LNR and owed by Lennar) the flexibility to price their balance sheets as though a 30 to 50 percent devaluation of assets has not occurred.

    This is not the place to argue whether enforcing the mark-to-market rule — or just to shrug and let it go– would have resulted in 25 percent unemployment throughout the United States, but there is no question that the fundamental characteristic of the time-release depression is precisely to allow the big recipients of debt to survive and not collapse. That’s Plan A. The problem: there is no Plan B.

    Read the whole thing and note how lack of regulation in this area indirectly allows a lot of environmental destruction as well.

    Elizabeth Warren rips into the banking lobby – Banking on Hypocrisy.

    ABA lobbyists now aggressively insist that separating consumer protection and safety and soundness functions would unravel bank stability. Yet just a few years ago, they heatedly argued the opposite — that the functions should be distinct.

    ~snip~

    If saying down is up and up is down — or, for that matter, that the CFPA’s consolidation of seven bloated, ineffective bureaucracies into one streamlined agency will create more bureaucracy — then the ABA lobbyists are willing to say it.

    ~snip~

    The ABA’s premise that the country can’t have both meaningful consumer protection and safety and soundness is wrong. In fact, its defense against an independent consumer agency boils down to this: If banks can’t trick and trap people with fine print and legalese, they won’t be able to turn a profit.

    James Kwak at the Baseline Scenario concurs.

    Also from Baseline Scenario, Simon Johnson weighs in – Volcker, Warren, and Kaufman: There Must Be New Law.

    And here is Senator Kaufman’s speech from a few days ago on the subject – Ending Too Big Too Fail.

    For those not familiar with Kaufman, he is a Senator from Delaware appointed to serve the remainder of Joe Biden’s term. He is not running again so he is not raising money and is beholden to nobody. He seems to be taking his job a lot more seriously than back-slapping Biden did. Take the time to read the whole thing, but in a nutshell he argues that the currently proposed legislation is not nearly strict enough and basically just reiterates regulations that are already on the books but were not enforced and still aren’t being enforced. The only solution is a new Glass-Steagall with new firewalls which would break up the too-big-to-fail banks once and for all.

    These mega-banks are too big to manage, too big to regulate, too big to fail and too interconnected to resolve when the next crisis hits. We must break up these banks and separate again those commercial banking activities that are guaranteed by the government from those investment banking activities that are speculative and reflect greater risk. We must limit the size, liabilities and leverage of any systemically significant financial institution.

    Given the ever-increasing rate of financial innovation, the need for Congress – not the regulators – to impose these time-honored principles has never been greater. The stakes have never been higher.

    It is time to follow in the footsteps of those great senators who made the tough decision in the 1930s to pass the Glass Steagall Act and other landmark reform bills, which paved the way for almost 60 years without a major financial meltdown. Once again, we must ensure that government guarantees of commercial bank deposits do not enable financial institutions to engage in the risky activities of investment banks.

    Also, another book to add to the reading queue – 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown from James Kwak and Simon Johnson.

  3. cometman permalink*
    March 30, 2010 10:07 am

    Ha! This little post sums up Paul Krugman pretty well.

    So, let me give you a little tale on how Paul’s financial reform advocacy will go:

    First few columns: “These bankers are greedy bastards and Wall Street really needs to be fundamentally changed.”

    Next few columns: “We really need this, this, and this. It’s imperative, to do anything else would be a sham on the American people and destructive to the American economy.”

    Columns once the bill is pretty much intact: “All this is not nearly enough, they didn’t do anything, but there’s still time to make a couple good changes.”

    Columns once it’s clear even to Mr. Krugman the Democrats are in the tank for Wall Street and nothing good is going to come of it: “Well, this isn’t a great bill, but we need to hold our nose and vote for it, to do nothing will be fatal for November.”

    Column when bill is passed: “This is historic, the Democrats are just great, we can improve it in the future.”

    A couple years ago I took what he had to say a little more seriously but in the ensuing months he has definitely NOT been one of those who is willing to criticize the Democrats harshly when they do the exact same fucked up things as the republicans. His coverage of the health care “reform” sham went almost exactly as the author above speculates his coverage of financial “reform” will go.

  4. cometman permalink*
    March 30, 2010 10:46 am

    Just got an email that “<0" will be making an appearance in my fair city on April Fool's Day.

    How utterly appropriate.

    • Stemella permalink*
      March 30, 2010 1:07 pm

      Indeed. It is also, if I remember correctly, the one year anniversary of our little blog. An auspicious day to be sure. I have always identified with court jesters and truth telling fools. I promise in advance that I won’t delete this blog like some other fool of the briney variety, even in jest.

      • cometman permalink*
        March 30, 2010 2:18 pm

        Let me know if you’ve got a good anniversary post to put up! I’ve got no good ideas right now.

        • Stemella permalink*
          March 31, 2010 9:16 am

          I’m working on an image, so at the least I can post another thread. Not sure of any substantive text though. At the moment I only feel like flinging expletives at Obama.

  5. artemis54 permalink
    March 30, 2010 12:01 pm

    More on elephant locomotion: elephants move like 4×4 vehicles in the sense that each limb acts in propulsion and in braking.

    Details sadly behind the Great Wall of PNAS.

    • cometman permalink*
      March 30, 2010 2:34 pm

      Interesting. My first thought was that it wasn’t really all that complicated and the reason they walk funny is because their back legs bend in the opposite direction than most (all?) other four-footed mammals. Here’s another article from a few years ago about the same researcher. Evidently he’s heard comments like mine before. :)

      Dr Hutchinson said: “We are particularly interested how elephants coordinate their limbs and working out which joints contribute most to the length and frequency of their steps. In examining whether elephants truly run or not we need to understand what limits their top speed. Is it the tendons and muscles having to withstand the impact of 7 tonnes of elephant or is it something else?”

      This is not a trivial question as Dr Hutchinson explained: “A better understanding of elephant biomechanics offers the possibility for real animal welfare improvements. By developing ways to spot slight changes in gait and joint movements in captive elephants we can catch the early onset of osteomyelitis and arthritis. If these conditions are not treated early they can result in an elephant being put down.”

  6. cometman permalink*
    March 30, 2010 12:17 pm

    Here’s an interesting article from what I gather is a relatively new Discover website called Not Exactly Rocket Science.

    Tree ring analysis has shown that the one glittering city of Angkor Wat may have fallen into ruin due to two severe droughts.

    • Stemella permalink*
      March 30, 2010 1:30 pm

      As with the plight of the Mayans the Khmer could not adapt to the environmental flux, their infrastructure too rigid, the exploitation of resources too demanding. The lessons stare us all in the face and our leaders keep us in stasis.

  7. cometman permalink*
    March 30, 2010 2:01 pm

    Check out this bullshit on the SEC’s decision to limit short-selling – SEC Let Politics Spur Short-Sale Decision. Whether it’s health care or economics or the environment the actual facts seem irrelevant to the government these days. Decisions get made entirely on the basis of what the corporate masters who paid for their political whores want.

    The U.S. Securities and Exchange Commission’s decision to restrict short selling was a political decision rather than one based on evidence, according to a former agency official who says it may set a precedent for future decisions.

    Commissioners who voted for curbs when a given stock falls 10 percent from the prior day’s closing price did so without proof that it would improve markets, said Erik Sirri, who ran the SEC’s division of trading and markets during the credit crisis that began in 2007.

    ~snip~

    The SEC pursued short-selling curbs without the sort of data it relied on in the past, according to Henry Hu, director of the SEC’s division of risk, strategy, and financial innovation.

    “Right now there isn’t enough data out there that would allow this type of quantification” about investor confidence, said Hu, speaking on Feb. 24 at the commission’s meeting to rule on short sales. “Inevitably there’s a judgment call involved.”

    There’s been a lot of back and forth with the rules on shorting and I just don’t get it. The problem is not shorting stocks. If we are going to live in a system which allows the casino that is the stock market to operate and we are going to allow the idiots on CNBC with their horns and bells and whistles blaring to do things like tout the stocks of companies that have never made a dime, sending their prices higher on no fundamental basis whatsoever, then there is nothing wrong with allowing those who call bullshit on all this into the market too. Again,the problem is not with short-selling, it is with naked short-selling aka counterfeiting. That’s already illegal as well it should be but of course nobody at the SEC has bothered to look into who was doing all the naked shorting of Lehman brothers before its collapse.

    More vitriol about this from Zerohedge:

    And what politics was involved pray tell? Why, the type that would make the new president incredibly unpopular even before he was sworn in. It becoming increasingly clear with each passing day that this country’s equity market is nothing but a sham and a teleprompter-friendly mirror before which Obama can act glum, even as the very regulators allow the market to be manipulated in a way that encourages risk taking, and thus delay and inevitable and terminal crash. But to Obama a crash in the future is worth a hundred rallies in the present. Just as a bankrupt America in five years is worth(less) a mid-term election won (by the narrowest of margins) in November. Not only is the fiscal and monetary policy of this country doomed to an eventual debt repudiation outcome, so, we are now certain, the markets will hit 36,000, wiping out all the shorts on the way, only to be followed by a surgical collapse straight to zero. You will have only the current and past administrations to thank for that, together with all their crony, corrupt, and incompetent regulatory agencies, with the SEC (and CFTC) at the very top of that list. In the meantime, and borrowing from a very prescient French (wo)man in the ending days of that particular civilization, After This Administration, The Deluge.

    ~snip~

    We wonder if the next step in this escalating politicization of markets will be the ability to sell a stock only if one can prove they voted for a certain candidate in the previous election.

    He could use a little help with his French history (pedant alert! :P ) since it was Louis XV who said “Apres moi, le deluge” and it seems he may be confusing that Louis with Marie Antoinette, married to Louis XVI, but other than that he sounds right on to me.

  8. sisdevore permalink
    March 30, 2010 6:26 pm

    Good on you. High five with 8 tentacles.

  9. Stemella permalink*
    March 31, 2010 9:13 am

    Drill, Barry, Drill

    Obama to permit oil exploration off Virginia coast

    Obama, who wants Congress to move a stalled climate change bill, has sought to reach out to Republicans by signaling he is open to allowing offshore drilling, providing coastlines are protected.

    And those Republicans are saying he isn’t going far enough. Reagan really is a zombie and he has come back as Obama. Jesus fuck. The capitulation from this horrible point of origin can only end very badly for the environment, not to mention the environmental movement.

    He is keeping the promise of his State of the Union. His groupies are no doubt going to cheerlead that fact. Sickness.

    • cometman permalink*
      March 31, 2010 8:10 pm

      Truly sickening. Let me see if I’ve got this straight. Barry’s going to allow drilling in order to get the support from republicans whose support he doesn’t actually need since the Dems have a majority in both houses of Congress in order to pass a climate change bill that likely won’t do jack to help the climate because it’ll be all about carbon credits and even if it did help it would all be offset by the extra fossil fuels from the drilling he started in the first place.

      And yeah, the same people who would have excoriated Bush will cheer Barry on.

  10. cometman permalink*
    March 31, 2010 9:41 am

    Check out this video interview with Bill Black from Real News Network.

    Here’s Part 1:

    The rest of the series can be found here.

  11. Stemella permalink*
    March 31, 2010 9:49 am

    Good post by Yves on the continued practice of mortgage fraud. Again, this is the core problem in my view. No matter the green shoots, the uptick in mortgage applications, the elevation in the manipulated markets, the marginal increase in hiring the corruption engaged in by fraudsters is still there; their wheeling and dealing enabled, not deterred. The pirates are still pillaging, the criminals are still stealing. There is no grounds for credibility or trust.

    Rampant fraud in the mortgage industry has increased so sharply that the FBI warned Friday of an “epidemic” of financial crimes which, if not curtailed, could become “the next S&L crisis.”

    And here is a related story from the LA Times about the larger long term picture

    Housing crisis turns some suburban neighborhoods into ghost towns

    • cometman permalink*
      March 31, 2010 8:13 pm

      For our vast readership who may not click that link, the FBI wasn’t warning this past Friday, but a Friday back in 2004. Nobody listened then and nobody among those who have the power to change those practices is listening now.

  12. cometman permalink*
    March 31, 2010 9:54 am

    Some food for thought – James Lovelock asserts that humanity is too stupid to prevent climate change.

    And a link to a larger transcript of the interview.

  13. cometman permalink*
    March 31, 2010 10:17 am

    More Brave New World – Columbia scientist grows a human jaw bone from stem cells.

  14. cometman permalink*
    March 31, 2010 10:42 am

    A big fuuuuuuuuuuuu-uuuu-uuuuuck you to Olympia Snowe. I didn’t like the health care bill either but bullshit like this is just ridiculous.

    “It’s disappointing the way in which it unfolded,” Snowe said Tuesday of the recent votes to approve health care legislation. “Process does make a difference.”

    Snowe spoke with members of the Journal Tribune’s editorial board Tuesday while back in Maine this week.

    The senator said she was surprised the bill was passed and voted on so quickly by the U.S. House of Representatives and Senate after she was personally assured by Senate Majority Leader Harry Reid that the senators would have an open amendment process on the floor.

    So quickly????!?!?!?! Correct me if I’m wrong here Olympia but hadn’t all of you assholes in DC been dithering about this bill for well over a year? There was absolutely nothing done to ‘cram this down anyone’s throat’ and certainly nothing that the republicans hadn’t done dozens of times themselves to pass even worse legislation.

    And I’m sure Ms. Snowjob is well aware that any of her concerns about small business suffering could have been alleviated by passing a real government run universal single payer system rather than continuing to coddle the parasites in the health insurance industry which Snowe supports.

    On a related note, I got another email today about the upcoming “<0" visit to my fair city from a local activist group which ostensibly supports a single payer system. They got wind that the nutjobs will be there protesting the recently passed health care reform and wanted to make sure others were there to "thank" "<0" for his efforts with suggestions for positive signs that could be made. I wrote back giving my own suggestions for some signs, told them it was a peasant mentality that thanked the powers that be for the crumbs they threw to the rest of us, and that I would not be volunteering my efforts any longer if this was the best they could come up with.

    What passes for the left in this country has truly been kneecapped and rendered useless by the snake oil salesmanship of Obama and the Democrats. Time to grow some balls and remember that it's not OK when the Dems pull the same fucking bullshit as the republicans do.

  15. cometman permalink*
    March 31, 2010 10:49 am

    More evidence of the police state this nation has become.

    Some people in New York are wondering whether the presence of police officers toting machine guns through the city’s subway tunnels is really a necessary response to the subway bombings in Moscow on Monday.

    “I think it’s ridiculous,” Torey Deprisest, a tourist from Ohio, told the New York Post. “The attack happened in a different country and had nothing to do with Americans. I’d be nervous seeing cops with machine guns on the train. It makes people afraid when they don’t need to be.”

    For the sake of argument, let’s just say the police do spot somebody on the subway who wants to blow some shit up. They’re going to open fire on a crowded subway with automatic weapons? Really? I’m sure that wouldn’t cause any “collateral damage” whatsoever.

    Way too much crazy going around with just about everything. Isn’t there just one issue that could be discussed without injecting copious doses of insane into it?

  16. cometman permalink*
    March 31, 2010 11:52 am

    Need a job? Looks like there’s a demand in the NE for people willing to run a slaughterhouse to meet the demands for locally grown meat.

    In what could be a major setback for America’s local-food movement, championed by so-called locavores, independent farmers around the country say they are forced to make slaughter appointments before animals are born and to drive hundreds of miles to facilities, adding to their costs and causing stress to livestock.

    As a result, they are scaling back on plans to expand their farms because local processors cannot handle any more animals.

    The article concentrates on Vermont, an area I’m very familiar with, and gets to the root of some of the problems.

    Mr. Quenneville [program chief of VT’s meat inspection service] said a number of small, family-owned slaughterhouses started closing when strict federal rules regarding health control went into effect in 1999. Large corporations like Cargill also began to take over much of the nation’s meat market.

    My family’s farm in VT used to slaughter animals for other people until new regulation made it not worth their time. Now they just do it for personal consumption. So much regulation, sometimes by design when the big companies write it, actually hinders small business and adds to the bottom lines of the corporations as their competitors go under. Some reasonable regulation that allows small operations to slaughter animals without having to build a facility only a big corporation can afford would probably alleviate that problem for a lot of farmers.

    One other problem.

    “You need skilled management and work force, a cooperative town, a good supply of water, a good way of getting rid of waste,” said Ed Maltby, a spokesman for Adams Farm, a slaughterhouse in Athol, Mass., that reopened in 2008 after a fire. “It’s not a problem that can be easily solved.”

    I don’t think it’s really that complicated since, as melvin mentioned in this excellent post, there are plenty of people (like my family) who know how to do this stuff already – they just get forgotten and forced out. My family’s farm is fed by an abundant natural spring and is in a rural area where there aren’t too many people around to bother. My relatives can turn a live cow into two sides of beef in about an hour. The waste gets thrown in the fields and eaten by coyotes and other animals (Of course the coyotes in turn sometimes get shot as they’re eating the offal, but that’s another story).

    If small slaughterhouses were as abundant as they used to be there would be more waste. I’m quite familiar with the man who used to take care of this problem in the town of Woodstock mentioned in the article. His name was Cy Osmer and he was a knacker who picked up dead farm animals in his pick up and sold them. He didn’t smell that great and he used to put off the tourists by driving through town with four stiff legs sticking up from of the back of his truck which I found highly amusing. Just found this little blurb which has a good description of him too. Despite his choice of work, the man was definitely not poor as my family has attested to on several occasions when I asked about the guy as a kid.

    Anyway, this is a problem which can be solved pretty easily by simply going back to the way things used to be not all that long ago if the politicians and the corporations they represent would just get out of the way.

  17. cometman permalink*
    March 31, 2010 12:09 pm

    I loved this one. Former coca grower and current Bolivian president Evo Morales has long argued that Bolivian government would take care of the cocaine produced in Bolivia without the “help” of US anti-drug crusaders and that the coca plant has many beneficial uses and it should be allowed to continue to be cultivated. Now Evo and the Bolivians are sticking it to Coca-Cola with Coca Colla.

    The Andean nation’s indigenous people have long resented the U.S. beverage company for usurping the name of their sacred coca leaf. Now, they are aiming to take back their heritage. Recently, the government of Evo Morales announced that it would support a plan to produce a coca-based soft drink which would rival its fizzy American counterpart.

    It’s still unclear whether the new drink will be promoted by a private company, a state enterprise, or some type of joint venture between the two.

    The new beverage will be called Coca Colla, in reference to age old history: in Bolivia, Quechua, Aymara and other indigenous peoples descended from the Incas are known as collas.

    In a move that will undoubtedly exasperate Coke, Bolivian officials say Coca Colla will feature a black swoosh and red label similar to the classic Coca-Cola insignia. Coca Colla reportedly has a black color, just like normal Coke, and could be sold on the market as early as April.

    “Coca Cola robbed from us the name of our coca leaf and moreover has cornered the market all over the world,” says Julio Salazar, Secretary General of the Bolivian Coca Growers’ Federation and Senator from Evo Morales’ Movement Towards Socialism Party (known by its Spanish acronym MAS). “It is high time that the true owners of this natural resource benefit by industrializing our coca,” he added.

    Ha! I’ll drink to that!

  18. artemis54 permalink
    March 31, 2010 12:32 pm

    Raincoast Conservation Foundation has finally coughed up its report What’s at stake? The cost of oil on British Columbia’s priceless coast (63-page pdf). This report was much hyped last week as part of the Exxon Valdez anniversary push against the horrors of the tar sands coming to the coast, but then the electronic version mysteriously never appeared. Allegedly for technical reasons, but a very quick scan suggests that the legal advisors were probably having fits. There is a review of Enbridge’s record on pipeline leaks, for instance, which is not what you’d call favorable.

    Will have to be updating this at the Deli later – today is not my best day.

    Oh, Discover magazine also named Human predators outpace other agents of trait change in the wild one of its Top Science Stories of 2009. Its first author Chris Darimont is also one of the principal authors of What’s at stake?.

  19. artemis54 permalink
    March 31, 2010 12:46 pm

    How cool is this?

    Dome School Biochar Project

    The Dome School is a

    private
    parent-teacher cooperative, kids are potty-trained to 5th grade

    • cometman permalink*
      March 31, 2010 8:19 pm

      That was pretty neat. I think it’s great that they are teaching kids how to actually do things and make the things they may need rather than letting them think it all comes from the big box store. And they learn a lot about science in the process. The whole saving the urine thing I’m not sure I’d be that into, but other than that it was really cool.

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