After the Wall Street Crash of 1929, caused mostly by banks investing in questionable schemes to inflate their investments, the Great Depression descended upon America.
In 1933, Congress passed the Glass-Steagall Act, which following the Great Crash of 1929, one of every five banks in America fails. Many people, especially politicians, see market speculation engaged in by banks during the 1920s as a cause of the crash.
In 1933, Senator Carter Glass (D-Va.) and Congressman Henry Steagall (D-Ala.) introduce the historic legislation that bears their name, seeking to limit the conflicts of interest created when commercial banks are permitted to underwrite stocks or bonds. In the early part of the century, individual investors were seriously hurt by banks whose overriding interest was promoting stocks of interest and benefit to the banks, rather than to individual investors. The new law bans commercial banks from underwriting securities, forcing banks to choose between being a simple lender or an underwriter (brokerage).
Thru the years, the banks chaffed at regulations that forced them to stay out of the speculation business and tried repeatedly to get Glass-Steagall repealed.
In the spring of 1987, the Federal Reserve Board votes 3-2 in favor of easing regulations under Glass-Steagall Act, overriding the opposition of Chairman Paul Volcker. The vote comes after the Fed Board hears proposals from Citicorp, J.P. Morgan and Bankers Trust advocating the loosening of Glass-Steagall restrictions to allow banks to handle several underwriting businesses, including commercial paper, municipal revenue bonds, and mortgage-backed securities.
In January 1989, the Fed Board approves an application by J.P. Morgan, Chase Manhattan, Bankers Trust, and Citicorp to expand the Glass-Steagall loophole to include dealing in debt and equity securities in addition to municipal securities and commercial paper. This marks a large expansion of the activities considered permissible under Section 20, because the revenue limit for underwriting business is still at 5 percent. Later in 1989, the Board issues an order raising the limit to 10 percent of revenues, referring to the April 1987 order for its rationale.
In 1990, J.P. Morgan becomes the first bank to receive permission from the Federal Reserve to underwrite securities, so long as its underwriting business does not exceed the 10 percent limit.
In December 1996, with the support of Chairman Alan Greenspan, the Federal Reserve Board issues a precedent-shattering decision permitting bank holding companies to own investment bank affiliates with up to 25 percent of their business in securities underwriting (up from 10 percent)
By loosening the restrictions imposed by the Glass-Steagall act, banks like Citicorp and Chase go on an investment and merger spree.
Finally, after 12 attempts in 25 years, Congress finally repeals Glass-Steagall, rewarding financial companies for more than 20 years and $300 million worth of lobbying efforts. Supporters hail the change as the long-overdue demise of a Depression-era relic.
The innocuous sounding Financial Services Modernization Act of 1999, also guts the Bank Holding Company Act of 1956, which had set restrictions on banks, preventing bank holding companies owning two or more banks from engaging in non-banking activity and from buying banks in another state.
Just days after the administration (including the Treasury Department) agrees to support the repeal, Treasury Secretary Robert Rubin, the former co-chairman of a major Wall Street investment bank, Goldman Sachs, raises eyebrows by accepting a top job at Citigroup as Weill's chief lieutenant. The previous year, Weill had called Secretary Rubin to give him advance notice of the upcoming merger announcement. When Weill told Rubin he had some important news, the secretary reportedly quipped, "You're buying the government?"
With the barrier between banks and shady investments gone, they engaged in a buyout/merger spree that helped to fuel the dot.com boom/bust.
When that failed, they moved into real estate speculation.
To keep up with this financial feeding frenzy, the private banks of the ill-named Federal Reserve have been printing their brand of counterfeit money, 24/7, 365.
Between the inflated money supply, which is based on the governments word and banks playing fast and loose with their investments, we are now facing another Crash of '29 and another Great Depression.
Copied, in part, from Frontline
It only seems like poetic justice that the U.S., the source of so much grief and so many wars in the world that have devasted other countries, is now going to be on the receiving end of that devastation.
One could take solace in the fact that when the roof falls in, in won't be from a "smart bomb" dropped from 15,000 feet
(a bomb more than familiar to people in the Muslim World) but a financial bomb, dropped by Wall Street.
What does this have to do with Israel? When Americans start getting kicked out their homes that have been repossessed by the banks, living on the streets, we'll be too damned broke to keep sending oodles and oodles of cash to the Apartheid State of Israel.
Which means Israel will have to find a way to live without having the U.S. always coming to its rescue with military and financial aid.
Which means Israel is slated for the dustbin of history.
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