By Pam Martens and Russ Martens: January 6, 2017
Northwest Ohio supporters of Senator Bernie Sanders in his run for President have launched a nationwide push to enlist other organizations to send it letters and take to social media to endorse a demand that President-elect Donald Trump fulfill a campaign pledge. Trump made the pledge on October 26 of last year in a speech he delivered in Charlotte, North Carolina, promising to enact a 21st Century Glass-Steagall Act to reform Wall Street. Such legislation has been sitting dormant in both the House and Senate for years. If enacted, it would separate the deposit-taking, taxpayer-insured commercial banks from the globe-trotting, high-risk trading casinos known as investment banks on Wall Street.
The 1933 Glass-Steagall Act kept the financial system of the United States safe for 66 years until its repeal in 1999 during the Bill Clinton presidency. It took only nine years after its repeal for Wall Street to blow up the financial system in a replay of 1929. All that prevented another Great Depression was a massive, secret money drop by the Federal Reserve.
Following the financial crash in 2008, the Federal Reserve fought for years in court to avoid providing details of the money it funneled to the Wall Street banks during the years of the crisis. When the Fed finally lost the legal fight, the Government Accountability Office (GAO) tallied up the secret Fed loans, all of which had been made at super low, below-market interest rates with no public or Congressional disclosure. The final tally came to $16.1 trillion in cumulative loans. (See the GAO report for a bank-by-bank breakdown of the loans.)
While Wall Street banks received trillions of dollars in almost interest-free loans, many of the same banks were charging the customers they had rendered homeless through foreclosures, double-digit interest rates on their credit cards.
During Trump’s speech in Charlotte on October 26, he delivered the following remarks: (See video clip below.)
“I will also pursue financial reforms to make it easier for young African-Americans to get credit to pursue their dreams in business and create jobs in their communities…Dodd-Frank has been a disaster, making it harder for small businesses to get the credit they need. You folks know that. The policies of the Clintons brought us the financial recession – through lifting Glass-Steagall, pushing subprime lending, and blocking reforms to Fannie and Freddie. Two friendly names but they’re not so friendly. It’s time for a 21st century Glass Steagall and, as part of that, a priority on helping African-American businesses get the credit they need.”
Sanders’ supporters have good reason to be holding Trump’s feet to the fire on his pledge to restore Glass-Steagall. Instead of making good on his pledge to drain the Washington swamp, Trump has stacked his administration with men tied to Goldman Sachs. Trump has nominated Steven Mnuchin, a 17-year veteran of Goldman Sachs to be his Treasury Secretary; named Stephen Bannon, another former Goldman Sachs banker, as his Chief Strategist in the White House; and nominated Gary Cohn, the current President of Goldman Sachs, to head the National Economic Council. Just this week, Trump nominated a Goldman Sachs outside lawyer, Jay Clayton of Sullivan & Cromwell, to serve as Wall Street’s top cop as Chairman of the Securities and Exchange Commission. In an added insult to the public’s sensibilities, Clayton’s wife currently works as a Vice President at Goldman Sachs.
The 849-page Dodd-Frank financial reform legislation, enacted over six years ago in 2010, has indeed been a failure as Trump correctly notes. Dodd-Frank mandated 398 new rules, none of which have been successful in curtailing fraud by Wall Street banks. What has happened instead is that the biggest banks on Wall Street are signing deferred prosecution agreements with the Justice Department for prior felonies as they invent ingenious new ways to loot the investing public. Instead of these so-called “universal” banks functioning as one-stop financial supermarkets as they promised Congress prior to the repeal of Glass-Steagall, they have become sprawling criminal enterprises, frequently operating as cartels to rig various markets or engaging in ever more brazen frauds, as we saw in the recent two million fake accounts at Wells Fargo or the London Whale scandal at JPMorgan Chase where it gambled with hundreds of billions of dollars of its depositors’ money, not its own capital, and lost over $6.2 billion in high-risk derivatives trading in London.
The organization pressing Trump to keep his campaign promise and asking others to make this a national campaign is Our Revolution in Northwest Ohio. The letter it is circulating has been endorsed by the Cuyahoga County Progressive Caucus and by Ohio Revolution. Sanders had promised his supporters a “political revolution.” Despite his loss in the presidential primary, his supporters are keeping that promise alive through this kind of grassroots activism.