Continuing Demands for Glass Steagall

June 2, 2010 (LPAC)—Economist Nouriel Roubini co-authored an op-ed in yesterday's Financial Times, reiterating the call for a Glass-Steagall overhaul of the international financial system—what he called "Glass-Steagall on steroids." Roubini assailed the bailout of the 2007-2009 financial bubble, which merely took a private financial bubble and turned it into a sovereign debt crisis. He began his Financial Times piece declaring, "The largest financial crisis in history is spreading from private to sovereign entities." After calling for a "grand workout" in which banks write off a large portion of the sovereign debt of nations like Greece, Spain, and Italy, Roubini declared, "It is time for radical reform of finance. The majority of proposals on the table are inadequate or irrelevant. Large financial institutions must be unbundled; they are too big, interconnected and complex to manage. Investors and customers can find all the traditional banking, investment banking, hedge fund, mutual fund and insurance services they need in specialized firms. We need to go back to Glass-Steagall on steroids."

The same message about the urgent need for Glass-Steagall was conveyed by Rep. Jay Inslee (D-WA), who wrote an op-ed on PNWLocalNews.com, headlined "The American public is outraged with Wall Street/My Turn." After expressing his disappointment with both the House and Senate banking reform bills, Inslee, who voted against the TARP bailout and later backed legislation to establish strict oversight over the TARP funds, wrote, "I will continue to push for stronger measures to limit the risks of unregulated derivatives and end the problems of 'too big to fail.' I have offered an amendment to cap the size of banking institutions, because if a bank is 'too big to fail,' it's too big. I also offered an amendment to the House version of Wall Street reform to reinstate the Glass-Steagall Act, a measure born out of the Great Depression that prevents banks from engaging in risky investment activity, and separately co-sponsored a bill, The Glass-Steagall Restoration Act."

A senior Democratic Party figure reported yesterday that the Roubini op-ed is indicative of a broad debate, now underway, among circles that both support and oppose LaRouche, over the need for the kind of reorganization that LaRouche has been promoting for a very long time.