Today we add the Financial Policy plank to our platform.
The People’s Platform:
Restore U.S. Manufacturing with balanced trade
- Confront China on trade relations
- Implement the Michael Graetz tax reform plan
Achieve energy self-sufficiency
- Upgrade our energy infrastructure
- Settle the “climate change” issue
- Create simplified regulatory framework
- Research and Development for future energy sources
- Repeal Dodd/Frank and replace it with a Glass/Steagall type law
Managing Speculation… Dodd/Frank or Glass/Steagall
The Glass-Steagall Act, also known as the Banking Act of 1933, was passed by Congress as a result of banking failures due to out of control speculation. It prohibited commercial banks (banks that take customer deposits) from engaging in the investment business (speculation).
It was enacted as an emergency response to the failure of over 4,000 banks during the Great Depression. It imposed tighter regulations on banks, prohibited bank sales of securities, and created the Federal Deposit Insurance Corporation (FDIC).
Beginning in the 1900s, commercial banks (banks that take deposits from customers) got involved in bond issues and underwrote corporate stock. In underwriting, a bank guarantees to furnish a definite sum of money by a definite date to a business or government entity in return for an issue of bonds or stock. This expansion of commercial banks into securities underwriting was widespread until the 1929 Stock Market Crash and the subsequent Great Depression.
In 1930 — seventeen years after the private Federal Reserve System took control of America’s money supply and credit — the Bank of the United States failed because of its involvement in these securities. It created artificial conditions in the market. In 1933, all the banks throughout the country were closed for a 4-day period, and 4,000 banks closed permanently.
As a result of the bank closings and the devastated economy, public confidence in the U.S. financial structure was very low. In order to restore the public’s confidence that banks would follow reasonable banking practices, Congress enacted the Glass-Steagall Act. The Act forced a separation of commercial (deposit) and investment (speculation) banks by preventing commercial banks from underwriting securities. Likewise, investment banks could not engage in the business of receiving deposits. The Glass-Steagall Act restored public confidence in banking practices during the Great Depression.
In November, 1999, President Bill Clinton signed into law the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act of 1933. One of the effects of the repeal is it allowed commercial and investment banks to consolidate. The new law removed the very safeguards that Glass-Steagall had erected.
The Federal Reserve Act OF 1913 coupled the American government with the Federal Reserve. Private bankers are not required to consider the welfare of the American people. As in any private industry, private bankers are in banking to make money for themselves. Within just 16 years, the Federal Reserve System had failed so badly that we had the Great Depression of 1929 and the Glass-Steagall Act had to be passed in order to prevent such a banking catastrophe again.
This is why so many people called for the reinstatement of the Glass-Steagall Act After the financial collapse of 2008. Banking conditions prior to the Great Depression were repeating themselves. Bailouts were called for after banks engaged in unsound banking practices. Consumer confidence in the banking system and the economy was naturally sinking, especially by those who know this particular aspect of banking history. Banks with sound banking practices do not demand the tax-payers to bail them out. Congress, acting to fix the problem, over-reached by enacting a bill known as Dodd/Frank which stifled loans to small business and throttled job growth.
Dodd/Frank should be repealed and replaced with proven legislation similar to the original Glass Steagall Act. Calls for bailouts by tax-payers will continue as long as the Federal Reserve System is coupled with the US Government, and the Glass-Steagall Act is not in place.
For more info, read “The Creature from Jekyll Island” by G.E. Griffin or visit www.WhatIsTheFed.com
Frank Shannon served in the U.S. Army, was an engineering/operations manager for AT&T for 27 years, was the owner of a small manufacturing business for 23 years, served as Colorado Chair of the Coalition for a Prosperous America and moved to Mesquite in 2013.