Stop This Madness!
The Dynamic Wealth Report
May 10, 2010
by Justin Bennett, Editor
A while back I wrote an article on the corporate greed and corruption on
Wall Street. I also talked about the Glass-Steagall Act of 1933.
Glass-Steagall was a great law providing for the separation of
commercial and investment banking. In a nutshell, the act prevented
commercial and retail banks from making bets in the securities markets.
But in 1999 Congress repealed the law. Former President Bill Clinton
signed on the dotted line. The repeal of the act allowed commercial
banks to (once again) make speculative bets in the markets.
Wow, what a shocker….
A mere 9 years after the repeal of this act the banking system melted
down.
The height of the credit crisis was in late 2008. Some of the same banks
demanding the repeal of Glass-Steagall came to Congress with hat in
hand.
They said they were “too big to fail”. These banks needed $700 billion
from Congress to bail them out. Yep, the good ole’ U.S. taxpayer was
forced to pony up.
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Why did the banks do such a thing?
They said there would be an economic depression. There would be a run on
the banks. The financial system would crack like a dropped egg if they
weren’t bailed out.
How did they get themselves in this position?
Fraud, that’s how!
A bankruptcy examiner's report for the collapse of Lehman Brothers was
recently released. The examiner found Lehman was engaging in accounting
fraud. The same type of fraud leading to the collapse of Enron in 2001.
Lehman was carrying $50 billion of toxic assets off its balance sheet. In essence, it was hiding the really bad stuff from public view. All in
an effort to keep investors happy. By painting themselves in a rosy
light they avoided scrutiny.
But eventually, the fraud caught up to Lehman. They couldn’t hide it
anymore. Lehman was going bankrupt.
Only this time, an institution the size of Lehman collapsing brought the
economy to its knees.
The collapse of Lehman sent shudders through the financial system.
Lehman held over $600 billion in debt. The systemic risk of a bank this
size collapsing was immense.
So where am I going with this?
It’s time for America to demand accountability for those engaging in
fraud on Wall Street. Nobody has taken responsibility for what happened
to Lehman. The financial crisis Lehman helped create is causing untold
hardship for America.
Millions of Americans are in dire straits due to collapsing home values
and unemployment. Yes, Americans are paying dearly for the fraudulent
actions of bank executives.
But not one banker has been put behind bars due to the obvious fraud
they perpetrated.
Some lawmakers are starting to take notice (finally). Delaware Senator
Ted Kaufman is filing an amendment to the upcoming Wall Street reform
bill.
The amendment promotes criminal prosecution of executives who engage in
financial fraud. The amendment allows for regulators, investigators, and
prosecutors to coordinate in rooting out fraud.
This amendment is a step in the right direction. Americans deserve to
see these crooks held responsible for what they’ve done.
Here’s what you can do…
Contact your Senators and tell them to support the Wall Street Reform
bill. Tell them you want Wall Street held accountable for their actions.
Tell them to push for the reinstatement of the Glass-Steagall act as
well.
This important act kept the banking system safe for over 60 years.
Commercial and retail banks made money by lending to businesses and
consumers. Investment banks made money by raising capital for
corporations and governments by issuing stocks, bonds, and other
securities.
By repealing the act, the distinction between commercial and investment
banks was wiped away. It was no coincidence the “you-know-what hit the
fan” a short time after Glass-Steagall was repealed.
• Gambling (Up 13%)
In the last 2 months one of the top performing industries is gambling.
Gambling destinations such as Las Vegas and Atlantic City are showing
increasing room bookings. Casino hotels have been cutting room rates in
recent years to attract business.
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