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Why Glass-Steagall?

Why Glass-Steagall?

Dr Wilson Sy of Investment Analytics Research, and former Principal Researcher at the Australian Prudential Regulation Authority (APRA), on 4 July issued the following explanation of why Australia needs a Glass-Steagall structural separation of banks. Bob Katter and Andrew Wilkie introduced Glass-Steagall legislation for Australia, the Banking System Reform (Separation of Banks) Bill 2018, in Parliament on 25 June.

Citizens Electoral Council of Australia
Media Release Thursday, 5 July 2018
Craig Isherwood‚ National Secretary
PO Box 376‚ COBURG‚ VIC 3058
Phone: 1800 636 432
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Website: http://www.cecaust.com.au

Why Glass-Steagall?

Dr Wilson Sy of Investment Analytics Research, and former Principal Researcher at the Australian Prudential Regulation Authority (APRA), on 4 July issued the following explanation of why Australia needs a Glass-Steagall structural separation of banks. Bob Katter and Andrew Wilkie introduced Glass-Steagall legislation for Australia, the Banking System Reform (Separation of Banks) Bill 2018, in Parliament on 25 June.

A cancer of financial speculation grows malignantly in the body of the global financial system which threatens the business of everyday life. Glass-Steagall is a law which cuts this cancer off from its ability to harm ordinary people.
(In 1933, Carter Glass and Henry Steagall introduced in the United States Congress a bill which legally separated commercial banking involving deposit taking and traditional lending to businesses and households, from investment banking involving securities trading and financial speculation.)

This law prevented the occurrence of financial cancers for decades, until it was mistakenly repealed in 1999 to advance the financial sector.

The existence of the cancer was exposed in the global financial crisis (GFC), when Lehman Brothers collapsed in 2008. The global economy was then saved temporarily from being consumed by the cancer when the voracious tumour was placated by trillions of dollars issued by monetary authorities to rescue the banks.

In the past decade, the emergency palliative has only caused further growth of the cancer which has now reached a size greater than one quadrillion dollars’ worth of derivatives. The limited treatment intended by regulators to shrink the cancer, by clearing and exposing it to the light of open exchanges such as clearing houses, has evidently failed, as large parts of the cancer remain unexposed.

Emergency surgery is required because little is known, still, about the nature of the cancer. The doctors of financial regulation have admitted error in assuming that the cancer was benign. For years they failed to investigate its nature. It is now far too late to find out, as its rapid growth is life-threatening.

Glass-Steagall surgery will bring the critical benefit that once the cancer has been excised, it can no longer harm ordinary people in their business of everyday life. Another important benefit is that any nourishment intended by the authorities to support the global economy will no longer be diverted to feeding the cancer of financial speculation by the banks.

Consequently, instead of having growing asset bubbles from financial speculation, we will have stronger growing economies which will benefit many more people. For financial safety and a healthy economy, we need Glass-Steagall now.

What you can do to get MPs to pass Glass-Steagall

• Write, email, phone or visit your federal MP to tell them they must support the Banking System Reform (Separation of Banks) Bill 2018. Click here to download copies of the bill and explanatory memorandum to send to them.

Click here to order a free copy of the CEC’s new banking handbook, The Next Financial Crash is Certain! End the BoE-BIS-APRA Bankers’ Dictatorship: Time for Glass-Steagall Banking Separation and a National Bank.

Click here to participate in the CEC’s mobilisation to get Parliament to pass Glass-Steagall.

Click here to join the CEC as a member.

Click here to refer others to receive regular email updates from the Citizens Electoral Council of Australia.

Last modified onThursday, 05 July 2018 03:06

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