Muscardini Introduces Interrogatory To European Commission on Glass-Steagall

May 18, 2010 (LPAC)—Member of the European Parliament Cristina Muscardini of Italy, submitted the following interrogatory to the European Commission regarding the McCain-Cantwell Amendment, and its appropriateness for adoption as a EU policy. Muscardini is the vice-president of the European Parliament Committee on International Commerce, and a former Italian Deputy. Here is the translation of her interrogatory. The Italian original is posted on her website.

European Parliament Written Question to the European Commission

May 13, 2010

Cristina Muscardini

- A Glass-Steagall Standard? -

On May 6, Democratic Senator Maria Cantwell and Republican Senator John McCain introduced an amendment to the "financial reform" bill before the U.S. Senate presented by the White House, which has led to a groundswell of support. According to EIR News Service, the amendment, which is modeled on the Glass-Steagall law of 1933 that protected bank deposits from the attack of speculation at the time of the Great Depression, had the support of 78% of the population in the initial polls taken in the ensuing 48 hours, and has triggered numerous initiatives in the Congress to limit the power of banks and hedge funds. Among other things, the 1933 law separated commercial banks from financial entities, preventing the latter from using depositors' money for their business. Senator McCain stated: "I want to ensure that we never stick the American taxpayer with another $700 billion — or even larger — tab to bail out the financial industry. If big Wall Street institutions want to take part in risky transactions — fine. But we should not allow them to do so with federally insured deposits. It is time to put a stop to the taxpayer-financed excesses of Wall Street."

Some will say that the European Union is different from the U.S., but the financial crisis has been defined as systemic, and thus global. Therefore, the measures that could be taken in the U.S. to deal with the crisis would also be valid in Europe, which has independently decided on significant defensive measures against problems with the public debt and speculation, in order to protect the euro. All fine and good! But

1. Does the Commission have an opinion on Glass-Steagall?

2. Would the Commission not consider it appropriate for the EU and the U.S. to restore the principles of the Glass-Steagall Act, which by separating commercial and investment banks de facto also prohibited the issue of risky and speculative securities like those which caused the speculative bubble and the resulting financial crisis?

3. Does the Commission not believe that such measures would represent effective actions to safeguard small investors and to combat the excessive circulation of virtual money, a significant cause of the crisis of the system?

4. By imposing innovative regulations on finance, would it not be easier to find investment for the development of the real economy, which by producing wealth, would be more effective in combatting debt?