Harlem and Bronx NY dudes dig Glass Steagall Act of 1933 and its revival by Sen. Elizabeth Warren. It really is Glass Steagalll or die.
Moving the leverage ratio won't change anything, says Dr. Gerrald Epstein — only Glass Steagall will change the fact that today's banks do nothing for the real economy.
Epstein, co-director of the Political Economy Research Institute (PERI) and a member of the anti-free-market Center for Popular Economics, both at Amherst College in Massachusetts, was interviewed on the Real News Network by Sharmini Peries from Baltimore, on the recent decision by U.S. regulators to raise the reserve requirement for banks from 3% to 5%. Epstein said this is meaningless, since banks didn't even keep to the 3% leverage ratio, using off-balance-sheet assets, "risk-weighted asset valuations" (which allows so-called low-risk assets to be valued at less than face value, but, of course, "using false models that would show that the assets were really safer than they were"), and exotic derivatives, to make it appear that "they had almost no capital to speak of in the lead-up to the crisis."
Asked what he recommended, he said to end the use of risk-weighted assets and off-balance-sheet assets, lift the reserve ratio to 10% (Brown Vitter), and implement Glass-Stegall:
"Elizabeth Warren and others have proposed a reinstatement of the Glass-Steagall Act,"he said.
"That is, a separation of the very risky speculative kind of banking from more boring banking that is actually serving the needs of the real economy. So implementing something like that would also help, because, after all, we're not just looking at the risk that the taxpayers are going to have to bail out the banks, as important as that is. We're also talking about what it is the banks are actually doing to help the economy."
Epstein adds:
"We really can't rely anymore on these big Wall Street banks, if we ever did rely on them, because they simply don't have an interest in supporting the people in the real economy."
Yesterday, Elizabeth Warren responded to an intervention by LaRouche PAC organizers in Boston by pledging to go all out for Glass-Steagall after the current Congressional break.
