A reason why Warren has not yet endored Hillary ???? Maybe.

 Editor's notes:  Understand that Glass-Steagall divided the waters between banks and investment institutions from the 1930's to the mid-1990's.  Ten years after that protection was dissolved,  a Clintonian idea,  btw,  Affordable Housing,  a Progressive program based on the idiotic notion that every American  had a right to own her own home,  needed money for an increasing population of high-risk home loans to the working poor.  The local and smaller banks were limited in their funding and not willing to assume high risk loans   . . . . .    you know,  homes sold to potheads and the grossly unskilled or lazy   . . . . .  so the larger investment firms were brought into the mix with Fanny and Freddie (i.e. Central Planning) as safety nets for the burgeoning high risk loan market,  and,  within 10 years,  there were so many defaulted mortgages that the collapse in 2008  because unavoidable.  

At any rate,  Hillary has it all wrong when it comes to The Street and Investment banking while Elizabeth Warren is spot on.  Maybe this is why Warren has yet to endorse Hillary.   


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 . . . . .    Hillary Clinton asserts in her Times op-ed that repeal of Glass-Steagall had nothing to do with [the 2008 fiscal collapse]. She claims that Glass-Steagall would not have limited the reckless behavior of institutions like Lehman Brothers or insurance giant AIG, which were not traditional banks. Her argument amounts to facile evasion that ignores the interconnected exposures. The Federal Reserve spent $180 billion bailing out AIG so AIG could pay back Goldman Sachs and other banks. If the Fed hadn’t acted and had allowed AIG to fail, the banks would have gone down too.

These sound like esoteric questions of bank regulation (and they are), but the consequences of pretending they do not matter are enormous. The federal government and Federal Reserve would remain on the hook for rescuing losers in a future crisis. The largest and most adventurous banks would remain free to experiment, inventing fictitious guarantees and selling them to eager suckers. If things go wrong, Uncle Sam cleans up the mess.

Senator Elizabeth Warren and other reformers are pushing a simpler remedy—restore the Glass-Steagall principles and give citizens a safe, government-insured place to store their money. “Banking should be boring,” Warren explains (her co-sponsor is GOP Senator John McCain). 


That’s a hard sell in politics, given the banking sector’s bear hug of Congress and the White House, its callous manipulation of both political parties. Of course, it is more complicated than that. But recreating a safe, stable banking system—a place where ordinary people can keep their money—ought to be the first benchmark for Democrats who claim to be reformers.

Actually, the most compelling witnesses for Senator Warren’s argument are the two bankers who introduced this adventure in “universal banking” back in the 1990s. They used their political savvy and relentless muscle to seduce Bill Clinton and his so-called New Democrats. John Reed was CEO of Citicorp and led the charge. He has since apologized to the nation. Sandy Weill was chairman of the board and a brilliant financier who envisioned the possibilities of a single, all-purpose financial house, freed of government’s narrow-minded regulations. They won politically, but at staggering cost to the country.

Weill confessed error back in 2012: “What we should probably do is go and split up investment banking from banking. Have banks do something that’s not going to risk the taxpayer dollars, that’s not going to be too big to fail.”  [This is what Glass-Steagall did for 60 years, and the Clinton Democrats took it down in the 1990's  ~ editor]

John Reed’s confession explained explicitly why their modernizing crusade failed for two fundamental business reasons. “One was the belief that combining all types of finance into one institution would drive costs down—and the larger institution the more efficient it would be,” Reed wrote in the Financial Times in November. Reed said, “We now know that there are very few cost efficiencies that come from the merger of functions—indeed, there may be none at all. It is possible that combining so much in a single bank makes services more expensive than if they were instead offered by smaller, specialised players.”

Read the full article at The Nation, here.