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Glass-Steagall Would Remove the ’Fiscal Cliff’

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Although no one has yet put this in the context of the debate on the "fiscal cliff," the issue of re-enacting Glass-Steagall has not faded from the debate on "financial reform." Red Jahncke of Townsend Group, a hedge-fund consultanting firm in Greenwich, Connecticut, penned a solid piece in Monday’s New Hampshire Sentinel Source, titled "We Need Clear and Firm Bank Rules." Jahncke not only notes the simplicity of Glass-Steagall, but demonstrates the current battle over re-enactment, by contrasting (repentant) Sandy Weill with JPMorgan Chase’s William Harrison and "Treasury Secretary Geithner’s surrogate" Steve Rattner.

"It is clear who won this debate," Jahncke mockingly says, "whose words were wisdom and whose an old bankers tale. We must return to Glass-Steagall-like simplicity where the law limits bank size and separates complex activities. We cannot rely upon the good management or the regulation of ever-fallible men, no matter how talented or well-intentioned. The safety and survival of our financial system is at stake."

Last Friday, Rutgers University held a conference on Risk Management, the lead panel being a "debate" over "The Volker Rule, Dodd Frank and Revisiting Glass-Steagall." Speaking for "Strengthening regulation and enforcement" (Glass-Steagall’s re-enactment) were Jesse Eisinger, who co-authored the expose of the Megastar hedge fund in the mortgage securitization scam, and Chris Morris, of the Supervision and Risk Management Division (formerly under the supervision of John Hoenig) at the Kansas City Federal Reserve.

Executive Intelligence Review (EIR) is process of examining the incoming Congress, for their stands on Glass-Steagall. Although the net (partisan) turnover was small, a significant 85 new Congressional members were elected to the 113th Congress. In addition to the known Elizabeth Warren (D-MA) and Tammy Baldwin (D-WI), the Senate also gained (another former Rep and HR 1489 co-signer) Marie Hirono (D-Hawaii). The House has so-far known to have gained two new Reps from Washington state (which gained a Congressional seat this year): Democrats Susan DelBene, and Denny Heck.