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News / Brèves / The Globe and Mail’s Reguly Asks ’So why not go back to Glass-Steagall?’ 27 May 2012 (CRC)—A front page column in this Saturday’s Report on Business section of Canada’s national newspaper The Globe and Mail is titled “JPMorgan’s $2-billion loss should put wind in the sails of the Volker Rule. But don’t bet on it,” by Eric Reguly, datelined from Rome. “ ... In spite of Mr. Dimon’s [JPMorgan’s CEO Jamie Dimon—ed.] apologies and pleadings, the loss is not just an argument in favour of the Volcker Rule; it is an argument to roll back the clock to the Glass- Steagall era, when commercial banking (taking deposits and making loans to companies) was separated from investment banking (selling securities and providing liquidity by making markets for those securities). “Glass-Steagall came into effect in 1933, during the dark days of the Depression. The Glass-Steagall Act wasn’t fully dismantled until the Bill Clinton administration in the late 1990s. “ ... We all know what happened next. “ ... So why not go back to Glass-Steagall? It worked for decades. If it were to return, banks would take deposits and turn them into loans. The system presumably would not prevent the banks from allowing investment banks to bundle those loans into securities. The investment banks would do what investment banks do, which is to make markets and trade using their own capital. “ ... Will either the Volcker Rule, as it was originally intended or a new Glass-Steagall get implemented? Here is where author Reguly backs down from his well argued case for implementation of Glass-Steagall and bows to London’s financial forces in the City for whom The Globe and Mail speaks. Reguly argues that “banks ...and special interest groups “would never allow it! Here is Reguly’s conclusion: “Don’t count on it, for the simple reason that drafting legislation in the United States is now corrupted by the 2010 Supreme Court decision to allow special interest groups to spend without restrictions in federal elections. “This has allowed big business, from oil companies to banks, to contribute as much as they want to whom they want. Watch any candidate opposed to the Volcker Rule or a potential Son-of-Glass-Steagall get flooded with riches. “Favours, of course, would be repaid accordingly.” The irony that Eric Reguly is perhaps missing here is that all of the banks involved in casino games like those played by JPMorgan will soon go bankrupt and bring down with them the U.S. and most of the world’s productive economy UNLESS there is a Glass-Steagall law voted up in the United States Congress. Some courageous men and women in the United States have understood this and have publicly sponsored H.R. 1489, a bill in favour of reintroducing the Glass-Steagall law.