Why Dodd-Frank Must Be Stopped and Glass Steagall Must Be Reinstated

Dodd Frank is a Bankster Red Herring

Very few Americans understand a key fact of Dodd-Frank. Namely, Title II of the Act to establish an Orderly Liquidation Authority, vests the FDIC with the authority to conduct a Cyprus-style bail-in. The ostensible goal of the Dodd-Frank Act is “to protect the American taxpayer by ending bailouts.”  Nothing could be further from the truth.  First of all it was written by Credit Suisse and other international and national banks.  Think about that for a second.  The organized criminal cartels that control our banking systems actually wrote the bil that is supposed to save the global economies from the systemic failures of the banks that they own.  The bill is supposed to curb their profits.  And they wrote it.  

So how would Dodd Frank enable a Cyprus style bail-in? Vis a vis a cross-border bank resolution.

Bail-in, in its simplest terms, is the inverse policy of what was done under Franklin D. Roosevelt’s Glass-Steagall Act and the 1933 Banking Act generally. In the event of a banktuptcy, under bail-in the bank survives, the depositors do not. 

Your money is to be considered an investment in the bank and therefore your deposits can be confiscated in the event of a liquidation, which would be performed according to the rules and guidance of the Orderly Liquidation Authority.

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As is stated in an IMF review of the policy from April 2012, “The statutory bail-in power is intended to achieve a prompt recapitalization and restructuring of the distressed institution.” In the case of resolving a distressed globally active, systemically important, financial institution (GSIFI), bank creditors, specifically those whose assets exceed the FDIC insurance cap, will be subject to expropriation. This is not normal bankruptcy. Accounts and assets are seized and/or converted to stock under the resolution authority. The institution is prevented from failing. Values of securities are not written down through sale on the open market. And this is done to guarantee the continued operation of the financial institution and the “stability” of the financial system.

Restoring Proper Financial Regulation 

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. 

On Friday Sen. Tom Harkin (D-Ia.) introduced Senate Bill 985 (#SB985) to reinstate Glass Steagall. While the full text of the Harkin bill has not yet been posted by the Library of Congress, the fact that there is now a Senate bill to reinstate full separation of commercial banking from all other brokerage and speculative activities is a dramatic development. The fight for Glass Steagall has now moved to a new level.

This comes at a very precise and fortunate time.  Earlier this year, Rep. Marcy Kaptur, D-Ohio, introduced HR 129 to restore Glass-Steagall, saying, “The response of Congress to the 2008 financial crisis has been completely inadequate.”  Currently #HR129 – The Return to Prudent Banking Act– has 60 bipartisan co-sponsors in the House.  Four states have passed resolutions calling for reimplementation of Glass-Steagall, and a dozen other legislatures, including Virginia’s, are considering similar measures.


Specifically, the draft legislation has four components:

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.

What is important about this legislation over all others is that there would be absolutely no room for loopholes.  There can be no accidental oversight or negligence.  Investment banking would be completely separated from commercial banking.   

This is NOT to be confused with the red herring that Obama supported earlier in his first term, known as the "Volcker rule" named after former Federal Reserve chairman Paul Volcker .  That was a more complicated piece of legislation meant to stall real effective rules.  There is a reason for that.  Obama has received millions of dollars from investment banks, just like Romney, Bush, and all other presidential candidates.  The banks always hedge their bets and play both sides against the other.  DO NOT BE DECEIVED THIS TIME!

Additional Commentary
If you need more details on the Glass-Steagall Act of 1933 and why it is important to restore, watch this video.  Max Keiser is an excellent financial news reporter that does not hold back any punches for any banker fraud and conspiracy.

And in case you need still more reason to support restoring Glass-Steagall, hear what Elizabeth Warren has to say about it.  Remember she was warning us all of the impending doom from 2005-2008 as the housing bubble and financial crisis was bubbling.

If you want to know more about who was responsible for repealing Glass-Steagall, watch this video and look to Alan Greenspan.