Robert Reich on why both Democrats and Republicans won't control the Street with Glass-Steagall

Why Democrats Can't Be Trusted to Control Wall Street

By Robert Reich, Robert Reich's Blog

24 May 13

 ho needs Republicans when Wall Street has the Democrats? With the help of congressional Democrats, the Street is rolling back financial reforms enacted after its near meltdown.

According to the New York Times, a bill that's already moved through the House Financial Services Committee, allowing more of the very kind of derivatives trading (bets on bets) that got the Street into trouble, was drafted by Citigroup - whose recommended language was copied nearly word for word in 70 lines of the 85-line bill.

Where were House Democrats? Right behind it. Rep. Sean Patrick Maloney, Democrat of New York, a major recipient of the Street's political largesse, co-sponsored it. Most of the Democrats on the Committee, also receiving generous donations from the big banks, voted for it. Rep. Jim Himes, another proponent of the bill and a former banker at Goldman Sachs, now leads the Democrat's fund-raising effort in the House.

Bob Rubin - co-chair of Goldman before he joined the Clinton White House, and chair of Citigroup's management committee after he left it - is still influential in the Party, and his protégés are all over the Obama administration. I like Bob personally but I battled his Street-centric views the whole time I served, and soon after I left the administration he persuaded Clinton to support a repeal of the Glass-Steagall Act.

Jack Lew, Obama's current Treasury Secretary, was chief operating officer of Citigroup's Alternative Investments unit, a proprietary trading group, from 2006 to 2008, before he joined the Obama administration. Peter Orszag, Obama's Director of the Office of Management and Budget, left the Obama Administration to become Citigroup's vice chairman of corporate and investment banking, and chairman of the financial strategy and solutions group.

All these men are honorable. None has broken any law. But they and their ilk in congress - the Democrats who are now rolling back Dodd-Frank - don't seem to appreciate the extent to which Wall Street has harmed, and continues to harm, America.

It's not entirely coincidental that the Obama Administration never put tough conditions on banks receiving bailout money, never prosecuted a single top Wall Street executive for the excesses that led to the near meltdown, and still refuses to support a tiny tax on financial transactions that would bring in tens of billions of dollars as well as discourage program trading.

Democrats can't be trusted to control Wall Street. If there were ever an issue ripe for a third party, the Street would be it.

Nation Farmers Union on Glass-Steagall

Glass-Steagall: An Idea Worth Reconsidering

FOR IMMEDIATE RELEASE May 20, 2013 Contact: Melisa Augusto, 202-314-3191 maugusto@nfudc.org Dan McEvily, 202-314-3104 dmcevily@nfudc.org WASHINGTON (May 20, 2013) – National Farmers Union (NFU) President Roger Johnson commends Sen. Tom Harkin (D-Iowa) and Rep. Marcy Kaptur (D-Ohio) for introducing legislation to reinstate the Glass-Steagall Act, which would help protect the U.S. economy from widespread collapse. Sen. Harkin’s bill was dropped in the Senate on May 13th – the 80th anniversary of the original enactment of Glass-Steagall. “Congress must learn from the past in order to prevent future financial crises,” said Johnson. “The Federal Government, in its deregulatory zeal of the 1990s, repealed important laws like Glass-Steagall that separated commercial banking from investment banking. Doing so helped to set up the Great Recession.”   Glass-Steagall, or the Banking Act of 1933, prevented affiliations between banking and investment firms that could collapse simultaneously in a crisis. The Gramm-Leach-Bliley Act of 1999 repealed these provisions. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 made some improvements, but stopped short of the safeguards provided by Glass-Steagall.   “Sen. Harkin and Rep. Kaptur deserve great thanks for bringing these reforms back to the table and I urge all members of Congress to support prudent financial protections.”   National Farmers Union has been working since 1902 to protect and enhance the economic well-being and quality of life for family farmers, ranchers and rural communities through advocating grassroots-driven policy positions adopted by its membership. -30-

Rachel and Me

Had a chat with Rachel Maddow the other night, or at least I tried to.

The topic was economics, which she doesn’t do enough of, and I was on some sort of a panel. I suppose that’s why I was on: My friend and I have a website called Glass-SteagallNow.com. I need to spend more time updating it, because Glass-Steagall could solve the nation’s, and indeed the world’s, economic problems.

There were several economists and big shots on the program, all answering Rachel’s questions about their cockamamie theories about why we were in such a mess and how it was this group’s fault or that group’s fault. I raised my hand several times to get Rachel’s attention, but she just kept calling on the others. It was like I wasn’t even there.

If you don’t know, and you probably don’t, Glass-Steagall is the common name for the Banking Act of 1933. Named after its chief sponsors, Henry Steagall and Carter Glass, it was passed into law as soon as Roosevelt got into office, and stopped the crazy Wall Street speculators who caused the crash and depression of the 30’s. Just like now, you see, there was no real reason for the depression, other than banks that gambled with their depositor’s money, and, just like now, lost it all. Glass-Steagall said that if you took deposits, you were a regular or commercial bank. You had to be conservative and safe with their money, or you went out of business. And, if you behaved yourself, the deposits could be government insured, by a brand new thing called the FDIC.

But if you were the ‘other’ kind of bank, the ones that gambled on risky investments to make huge returns (or mammoth losses), you were an investment bank, and the people who gave you money knew what they were getting into. And no insurance, thank you very much.  Rich people liked to invest with investment banks, ‘cause they had the extra cash to lose, and could reap big benefits if they were careful. Because they knew the risks, investment banks were kept pretty small—rich people didn’t get to be rich by being stupid.

I was assuming that Rachel wanted me to explain how this all worked great until the larger banks, having already screwed the public in a number of ways (health maintenance organizations, airlines, savings & loans, energy, education loans, others) began to systematically undermine the banking system. They messed with Glass-Steagall in the 80’s (now known as the Savings & Loan scandal), but, undeterred by that fiasco continued to whittle away at the 56-page law that had kept banking system safe and reliable for 66 years. Investment banks were where the big profits were, if they could just combine with commercial banks and get their greedy little hands on all that cash they would have it made. Mountains and mountains of insured cash. Then, in 1999, with Bill Clinton’s Wall Street cronies in charge of the Treasury, and the Republicans in charge of the congress, they finally ‘shattered’ Glass-Steagall and opened the floodgates for major craziness.

They turned their attention to the real estate market—huge, safe, reliable and so vulnerable for exploitation. The banks immediately went to work getting their hands on these huge amounts of money that they could use to that make more money. And as long as the banking and real estate systems worked in cahoots they could make lots and lots and lots of money. All they really needed to do was to make sure that the real estate business just kept getting bigger and bigger and bigger. Everybody needs a house! Everybody needs a loan!

I really wanted to explain to Rachel that that’s not how the real estate business works. Real estate is based on something real and tangible. It grows at a steady regular, conservative pace. And if it doesn’t then it creates a bubble and when there’s a bubble then all hell breaks loose. And this bubble just grew and grew and grew for seven or eight years! Houses cost more and more and there was so much money and people would use their house as an ATM and everybody got a loan if they wanted one. And even if you didn't!

Until 2007 when everybody realized the houses weren’t worth what they were paying for them and suddenly the bubble burst.

I kept holding my hand up hoping that Rachel would call on me so that I could explain that all of these guys just had more and more complicated and unnecessary changes that need to be made when really the only problem was that Glass-Steagall shouldn't have been repealed in 1999.

I was getting very, very angry.  “Glass-Steagall”, “Glass-Steagall”, “Glass-Steagall” was all I wanted to say. But she wouldn't call on me.  Rachel, please!

Finally reaching extreme heights of anger, I sat up in my bed and looked around.

I turned off the TV and went back to sleep.

They’ll never get it, I remember thinking.

Margin Call – A Real Disappointment

by Elliott R. Morss Morss Global Finance

Introduction

After all the hype Margin Call received, I expected more. In my view, the movie was a real disappointment: it said virtually nothing about the banking crisis: just a bunch of people I can’t feel sorry for losing their jobs. And on that theme, how about the millions of people who lost their jobs because of the foolish and destructive things the bankers were doing?

After seeing the flick, I read some of the reviews. They were positive, with the emphasis on how entertaining the movie was. OK: the primary aim of movies is to entertain. But I think a movie providing a more complete picture of what happened could be even more entertaining than Margin Call. I offer an outline of such a movie below.

Scene One: 1933 – Glass-Steagall Act Enacted

The movie would start with an actor playing Senator Carter Glass arguing for passage of the Glass-Steagall Act. Glass, a former Treasury secretary and the founder of the U.S. Federal Reserve System, was the primary force behind the Act. Glass would explain why trading activities were too risky for banks and why the “investment banking” activities of banks had to be split off.

Scene Two: 1998 – Glass-Steagall Overturned

In the next scene, we would again be in Congress – this time for the repeal of the key provision of the Glass-Steagall Act. An actor playing Sandy Weill would lead off. Sandy owned Travelers, which owned Salomon Smith Barney, and he was arranging a merger with Citicorp. But Citicorp was a bank and Salomon was an investment bank – not a legal merger under Glass-Steagall. So the lobbyists go to work for Weill. In the following year, Congress passed the Financial Services Modernization Act of 1999, known as the Gramm-Leach-Bliley Act. This law effectively deleted the prohibition on commercial banks owning investment banks and vice versa.

An actor playing Treasury Secretary Larry Summers should then say what Summers was quoted as saying: ”Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century. ‘This historic legislation will better enable American companies to compete in the new economy.”

Scene Three – Efforts to Regulate Derivatives

Shortly later, Summers teams up with U.S. Securities and Exchange Commission Chairman Arthur Levitt, Fed Chairman Greenspan, and Secretary Rubin to torpedo an effort to regulate the derivatives market. Actors playing Greenspan and Leavitt should concede, as they have publicly, that this was a big mistake. Summers should be quoted as well on his back peddling in saying that not regulating AIG’s financial insurance activities was outrageous.

Scene Four – Changing Bank Objectives

The scene should switch to a single bank. But instead of focusing on the market collapse and lost jobs (Margin Call), the first scene should be the bank president telling the troops that the time for holding onto (and worrying) about their own loans was over: the future was in writing up and selling off as many loans as possible for commissions. Traders would then buy them back, package them, and sell them off again.

Next the new bank hires: instead of green eye shade people worrying about loan quality, aggressive salesmen to sell bank mortgages and other loans would be brought in. And young MBA types to develop derivative packages would also be recruited.

Portraying this change in bank objectives and incentives is fundamental to understanding the reasons for the Western banking collapse.

Scene Five – Bank Insurance

It was not just AIG that sold insurance on mortgage-backed securities. Banks did as well. This could be captured in a short scene where a bank “seller” tells his boss that one of their major clients is showing some reluctance in buying a mortgage-backed security package. His boss responds: “tell the client the bank will insure the package”.

Scenes Six & Seven – Loss of Mortgage Documentation

The loss of mortgage documentation is critical, both for understanding why the mortgage-backed securities market collapsed as well as why finding ways to help mortgage recipients failed. On the former, more than 90% of mortgages are performing well. Why, then, would the whole market collapse. Lack of documentation – nobody knew where the bad mortgages were. These points can be captured in two related scenes.

First, a scene focuses on the packaging process where two bank staffers talk about keeping or not keeping accurate documentation trails on mortgages being packaged. The scene should end with them agreeing on taking shortcuts. A good final line might be “I am sure if we asked Joe in the buying department, he would have no documentation on the mortgage derivative packages he is buying.”

Second, a scene where the bank president calls in his mortgage packagers/buyers/sellers and said I want to sell off all our non-performing loans. The buyers and packagers would then say “we have no idea which mortgages in our derivative packages are performing and which are not”.

Scene Eight – The Market Collapse

We are now at the point where Margin Call started. The real estate market starts down, banks want to sell of the mortgage-backed security packages, but nobody knows where the 90% good mortgages are, so the whole market tanks. And because nobody knows where the bad mortgages are, all MB holders become suspect. So banks won’t lend to one another…. A real quote from a Senator following a briefing with Treasury Secretary Paulson could set the stage. This could be followed by a series of panic calls among bank salesmen.

The AIG Bailout

The AIG bailout warrants a movie of its own. However, as an end to the moving I am proposing, I offer the following.

Scene Nine – Early September Phone Call

Lloyd Blankfein, the man who replaced Paulson as the head of Goldman, calls the now Treasury Secretary Paulson. Blankfein: “We need the insurance money AIG owes us immediately.” Paulson: “I will see what I can do.” Paulson calls Tim Geithner, the head of the Federal Reserve Bank of New York. Paulson: “I want you to lend AIG $85 billion so it can make insurance payments to banks.” Geithner: “OK. Let’s arrange a meeting with AIG”.

Scene Ten – The Mid-September Meeting

In mid-September 2008, Secretary Paulson and Geithner met with senior executives of AIG and the Bank’s headquarters in New York. Guess who else shows up at the meeting? Lloyd Blankfein. Geithner asks Paulson why Blankfein is there. Paulson says “because I asked him”. Geithner agrees to lend AIG $85 billion. Ultimately, the government pledged $182 billion to save AIG.

Scene Eleven – November 2008 – Pay Full Value

In the October-November 2008 period, claims against AIG mounted. Inasmuch as AIG was effectively insolvent without massive government backing, senior AIG staff believed it could settle claims at 60 cents on the dollar and were prepared to move ahead on that basis. Paulson said “No. Pay out 100 cents on the dollar”.

Scene Twelve – Attempted Cover-up

Geithner holds a meeting with AIG and says: “in your next report to the SEC, do not name the banks that you paid.” AIG official responds: “I doubt the SEC will accept a statement that does not include the names of recipients getting more than $1 billion from us.” Geithner: “try it.” On December 30, 2008, Jeffrey P. Riedler, Assistant Director of the SEC, send a letter to AIG requesting the details on who got paid. Geithner was able to keep the names from being released until March 15, 2009.

The movie ends with the following Table.

AIG Payments (in billions)
Goldman Sachs .... 12.9
Societe General ... 11.9
Deutsche Bank ... 11.8
Barklays ... 7.0
Merrill Lynch ... 6.8
Bank of America ... 5.2
etc.
Total ... $93,200,000

Source: AIG

Conclusion

In my humble view, this would make a great movie.

But until I get a call from Harvey Weinstein or Oliver Stone, the best movie on the banking collapse is Charles Ferguson’s “Inside Job”.

Zombie Glass–Steagall [Pseudo Glass-Steagall?]

by Glyn A. Holton, author and consultant with twenty years experience managing financial risk.

October 13, 2011
Zombie Glass-Steagall will soon be stalking the land.On Tuesday, the FDIC released proposed rules for implementing Section 619 of the Dodd-Frank Act—the so-called Volcker Rule. On Wednesday, the SEC did the same. This is a joint effort of the FDIC, Federal Reserve Board, SEC and OCC. Their—largely identical—proposed rules are based on a 79 page study released by Tim Geithner’s Department of Treasury in January 2011.

The Volcker Rule was, of course, an attempt to restore some of the safeguards that were lost in 1999, when Congress scrapped the 1933 Glass–Steagall Act’s separation of commercial and investment banking. In its original form—as Paul Volcker first proposed it in early 2009—the Volcker Rule would:

1. prohibit banks from engaging in proprietary trading, and


2. prohibit them from investing their own capital in hedge funds or similar speculative funds.
   

The first item is the crux of the rule. The second is a safeguard to prevent banks from indirectly speculating through a hedge fund or other entity. Volcker explained the rule’s intent as:

We ought to have some very large institutions whose primary purpose is a kind of fiduciary responsibility to service consumers, individuals, businesses and governments by providing outlets for their money and by providing credit. They ought to be the core of the credit and financial system. Those institutions should not engage in highly risky entrepreneurial activity. Barack Obama ignored Volckers proposal for a year, but with frustration over his coddling of Wall street near a boil, on January 21, 2010, he publicly endorsed it. With Volcker gleaming by his side, he dubbed it the “Volcker Rule.”

The actual rule he sent to Congress was weak. Senators Jeff Merkley (Democrat of Oregon) and Carl Levin (Democrat of Michigan) strengthened it, and it was their version that made its way into the Dodd-Frank Act. The Treasury Department’s January report weakened it, proposing that, instead of prohibiting banks from investing in hedge funds, that they be allowed to invest up to 3% of their capital in them. The document just released by the FDIC embraces that proposal.

Volcker was unhappy with what happened to his rule, even before Treasury did their hatchet job. We should probably rename it. One possible name would be “Zombie Glass-Steagall”. The rule doesn’t bring any of Glass-Steagall back to life. At best, it disturbs the grave of Glass-Steagall. It makes Glass-Steagall not alive, but undead. And the 298 pages of proposed regulations just released by the FDIC are an abomination—onerous, convoluted and riddled with loopholes.I have always opposed Zombie Glass-Steagall in any form because, fundamentally, it is flawed. While Glass-Steagall prohibited commercial banks from trading certain instruements, Zombie Glass-Steagall prohibits only the proprietary trading of those instruments. Proprietary trading can be indistinguishable from trading related to market making, hedging, underwriting, price discovery, liquidity management, asset-liability matching or a host of other practices. If a trader wants to disguise proprietary trading as one off these, believe me, he can.

Let me give you an example. It is called “trading around order flow”. Suppose a bank makes markets in certain bonds. They are negative on a particular bond, so, when a client places an order to buy that bond, they sell it without purchasing an offsetting position in the same bond. Selling the bond was “market making” but, by doing nothing at all, the bank now has a proprietary short position in the bond. The mere fact that the bank has that short position doesn’t make this proprietary trading. The bank will tell you that it is ineficient to hedge positions transaction-by-transaction—that they look at their portfolio overall and hedge its net exposures. Fair enough, but analyzing whether a trading book is hedged can be devilishly difficult. The trading book might have tens of thousands of positions in equities, bonds, derivatives, repos, you name it. Do you remember the debate over whether Goldman Sachs had shorted the mortgage market heading into the 2008 crisis? They smugly claim they were market neutral. How do you argue with something like that? It is all posturing.

The proposed rules that the FDIC and SEC just released envision banks implementing elaborate reporting and compliance systems to help senior executives and regulators spot proprietary trading. Banks will also have to calculate and track five categories of metrics:

• Risk-management measurements – VaR, Stress VaR, VaR Exceedance, Risk Factor Sensitivities, and Risk and Position Limits;


• Source-of-revenue measurements – Comprehensive Profit and Loss, Portfolio Profit and Loss, Fee Income and Expense, Spread Profit and Loss, and Comprehensive Profit and Loss Attribution;


• Revenues-relative-to-risk measurements – Volatility of Comprehensive Profit and Loss, Volatility of Portfolio Profit and Loss, Comprehensive Profit and Loss to Volatility Ratio, Portfolio Profit and Loss to Volatility Ratio, Unprofitable Trading Days based on Comprehensive Profit and Loss, Unprofitable Trading Days based on Portfolio Profit and Loss, Skewness of Portfolio Profit and Loss, and Kurtosis of Portfolio Profit and Loss;
  Customer-facing activity measurements – Inventory Turnover, Inventory Aging, and Customer-facing Trade Ratio; and


• Payment of fees, commissions, and spreads measurements – Pay-to-Receive Spread Ratio.
  All this is staggeringly complex. Larger banks could spend millions of dollars a year complying with this mess. Smaller banks will receive exemptions from much of the reporting—Zombie Glass-Steagall isn’t intended for them.

What are regulators going to do with all the data they receive on the various metrics? No matter how much data there is, any determination on its meaning will be subjective. Regulatory agencies are under budgetary pressure, so it is not clear how they will afford additional enforcement. With Congress and the White House beholden to Wall Street, so are the heads of those regulatory agencies. How much career risk are their employees going to take to enforce Zombie Glass-Steagall? It isn’t going to happen.

What is really sad is the fact that the objectives of Zombie Glass-Steagall could easily be achieved by merely prohibiting banks from trading non-exempt instruments, as was the case under Glass-Steagall before it was repealed. That solution would be simple, inexpensive and objective. We didn’t need commercial banks trading mortgage-backed securities or credit default swaps prior to 1999. We don’t need them doing so now.

Don’t blame the FDIC, Federal Reserve Board, SEC or OCC for this mess. The regulators are doing the best they can with an impossible legislative mandate. It was Congress and the White House who imposed that mandate. Zombie Glass-Steagall will soon be stalking the land. Call your elective representatives and tell them to repeal the monster.

Matt Taibbi knows Glass-Steagall works!

The $2 Billion UBS Incident: 'Rogue Trader' My Ass
by Matt Taibbi, Rolling Stone

The news that a "rogue trader" (I hate that term – more on that in a moment) has soaked the Swiss banking giant UBS for $2 billion has rocked the international financial community and threatened to drive a stake through any chance Europe had of averting economic disaster. There is much hand-wringing in the financial press today as the UBS incident has reminded the whole world that all of the banks were almost certainly lying their asses off over the last three years, when they all pledged to pull back from risky prop trading. Here’s how the WSJ put it:

The Swiss banking giant has been struggling to rebuild trust after running up vast losses in the original financial crisis. Under Chief Executive Oswald Grubel, the bank claimed to have put in place new risk management practices, pulled back from proprietary trading and focused on a low-risk client-driven model.

All the troubled banks, remember, made similar promises in the wake of the financial crisis. In fact, some of them used the exact same language. Some will recall Goldman’s executive summary from earlier this year in which the bank pledged to respond to a "challenging period" in its history by making changes.

"We reviewed the governance, standards and practices of certain of our firmwide operating committees," the bank wrote, "to ensure their focus on client service, business standards and practices and reputational risk management."

But the reality is, the brains of investment bankers by nature are not wired for "client-based" thinking. This is the reason why the Glass-Steagall Act, which kept investment banks and commercial banks separate, was originally passed back in 1933: it just defies common sense to have professional gamblers in charge of stewarding commercial bank accounts.

Investment bankers do not see it as their jobs to tend to the dreary business of making sure Ma and Pa Main Street get their $8.03 in savings account interest every month. Nothing about traditional commercial banking – historically, the dullest of businesses, taking customer deposits and making conservative investments with them in search of a percentage point of profit here and there – turns them on.

In fact, investment bankers by nature have huge appetites for risk, and most of them take pride in being able to sleep at night even when their bets are going the wrong way. If you’re not a person who can doze through a two-hour foot massage while your client (which might be your own bank) is losing ten thousand dollars a minute on some exotic trade you’ve cooked up, then you won’t make it on today’s Wall Street.

Nonetheless, thanks to the Gramm-Leach-Bliley Act passed in 1998 with the help of Bob Rubin, Larry Summers, Bill Clinton, Alan Greenspan, Phil Gramm and a host of other short-sighted politicians, we now have a situation where trillions in federally-insured commercial bank deposits have been wedded at the end of a shotgun to exactly such career investment bankers from places like Salomon Brothers (now part of Citi), Merrill Lynch (Bank of America), Bear Stearns (Chase), and so on.

These marriages have been a disaster. The influx of i-banking types into the once-boring worlds of commercial bank accounts, home mortgages, and consumer credit has helped turn every part of the financial universe into a casino. That’s why I can’t stand the term "rogue trader," which is always tossed out there when some investment-banker asshole loses a billion dollars betting with someone else’s money.

They’re not "rogue" for the simple reason that making insanely irresponsible decisions with other peoples’ money is exactly the job description of a lot of people on Wall Street. Hell, they don’t call these guys "rogue traders" when they make a billion dollars gambling.

The only thing that differentiates a "rogue" trader like Barings villain Nick Leeson from a Lloyd Blankfein, Dick Fuld, John Thain, or someone like AIG’s Joe Cassano, is that those other guys are more senior and their lunatic, catastrophic decisions were authorized (and yes, I know that Cassano wasn’t an investment banker, technically – but he was in financial services).

In the financial press you're called a "rogue trader" if you're some overperspired 28 year-old newbie who bypasses internal audits and quality control to make a disastrous trade that could sink the company. But if you're a well-groomed 60 year-old CEO who uses his authority to ignore quality control and internal audits in order to make disastrous trades that could sink the company, you get a bailout, a bonus, and heroic treatment in an Andrew Ross Sorkin book.

In other words, "rogue traders" are treated like bad accidents and condemned everywhere from the front pages to Ewan McGregor films. But rogue companies are protected at every level of the regulatory structure and continually empowered by dergulatory legislation giving them access to our bank accounts.

There is a movement in the UK for a thing called “ringfencing” that would separate investment bankers from commercial bankers. Some people think this UBS incident will aid that movement, even though UBS can apparently absorb the loss without necessitating a bailout or endangering client accounts.

The U.S. missed its own chance for ringfencing when a proposal for a full repeal of Gramm-Leach-Bliley was routed during the Dodd-Frank negotiations.

That means we’re probably stuck here in the states with companies like Bank of America, JP Morgan Chase and Citigroup, giant commercial banks in charge of stewarding trillions in client bank accounts and consumer credit accounts who also behave like turbocharged gamblers via their investment banking arms.

Sooner or later, this is going to blow up in our faces, and it won't be one lower-level guy with a $2 billion loss we'll be swallowing. It'll be the CEO of another rogue firm like Lehman Brothers, and it'll cost us trillions, not billions.

Bill Clinton on Glass Steagall: I was wrong!

Watch the video:

And the scariest thing is that Obama has depended on the same group of advisors as Clinton (Larry Summers, Robert Ruben, Tim Geithner and the rest of the gang from good ol' Goldman Sachs!)