We are still working to reduce financial system risks


Lisa McCormick supports legislation proposed by Senator Elizabeth Warren and others who are championing a reboot of the Depression-era law called “The 21st Century Glass-Steagall Act.”

The legislation’s purpose is, “To reduce risks to the financial system by limiting banks’ ability to engage in certain risky activities and limiting conflicts of interest, to reinstate certain Glass-Steagall Act protections that were repealed by the Gramm-Leach-Bliley Act, and for other purposes.”

“Deregulation actions by the Federal Reserve System Board of Governors and the Comptroller of the Currency, plus some federal court decisions, allowed commercial banks to engage in an increasing number of risky financial activities that had previously been restricted under the Glass-Steagall Act,” said Lisa McCormick. “Time eroded some consumer protections until a lobbying effort focused on tossing the rest.”

Congress enacted the “Gramm-Leach-Bliley Act”, which in 1999, repealed the Glass-Steagall Act separation between commercial and investment banking. This allowed for complex cross-subsidies and interconnections among different kinds of financial institutions that almost begged for the catastrophic results we saw in 2007 and 2008.

A year before the law was passed, Citicorp, a commercial bank holding company, merged with the insurance company Travelers Group in 1998 to form the conglomerate Citigroup, a corporation combining banking, securities and insurance services under a house of brands that included Citibank, Smith Barney, Primerica, and Travelers.

“The Citigroup merger was so big, it was a violation of the Glass–Steagall Act and the Bank Holding Company Act of 1956,” said Lisa McCormick. “Unfortunately, the Federal Reserve gave the conglomerate a temporary waiver in September 1998, and less than a year later, Gramm-Leach-Bliley was passed to legalize these dangerous mergers.”

“Political payoffs in the form of campaign contributions, shady loans and other favors heaped upon political insiders by the greedy rich were not countered by much public outcry,” said McCormick.

“Today, the biggest banks in America are larger than they were when they were determined ‘too big to fail’ without endangering the global economy,” said Lisa McCormick.

Not enough has been done to protect consumers, working families and retirees. Lisa McCormick supports “The 21st Century Glass-Steagall Act” and she will make eliminating political corruption her top priority as a US Senator, but that is only the beginning of her fight to restore justice, equality and prosperity to those Americans who have been robbed by the richest fraction.

Lisa McCormick believes uncontested elections are meaningless, so she is recruiting hundreds of progressive citizens to run for local, county and state offices in the next Democratic primary election and she is exploring a candidacy for US Senate in 2018.

 

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