Federal Regulators Have Gutted Safety and Soundness Rules for the Biggest Wall Street Banks
Bottom line: federal regulators are as clueless today as they were in 2008 when it comes to the level of systemic risk these banks pose to the financial system of the United States. The only way to rein in that risk is to break up these banks and restore the Glass-Steagall Act. That would separate these casinos from the federally-insured, deposit-taking banks.
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There is heavy irony in Citigroup now being outed as the employer of Gelinas, whose LinkedIn resume (also now removed) indicated he had worked for the bank for the past 17 years. Citigroup has a heavy history with the Clintons. President Bill Clinton’s Treasury Secretary was Robert Rubin. After Rubin helped to engineer the 1999 repeal of the 1933 banking legislation known as the Glass-Steagall Act, allowing federally-insured banks to merge with Wall Street trading casinos, Rubin became a member of the Citigroup Board of Directors and reaped $120 million in compensation over the next decade. Citigroup desperately needed the repeal of this legislation because it had already illegally merged Citicorp with Salomon Brothers the prior year.
Sandy Weill, the Co-CEO at Citigroup in 1999, who lobbied for the repeal of Glass-Steagall, was given a commemorative pen from the Clinton signing ceremony that repealed the legislation. Just nine years after the repeal, Wall Street banks like Citigroup blew up Wall Street, taking down the U.S. economy in the process.
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Memo to Biden: Cut Your Ties to Larry Summers
There is growing concern about Biden among progressives because he has made the decidedly ill-advised move of using the infamous Larry Summers as an advisor. Summers is the man who played an outsized role in the creation of Frankenbanks on Wall Street in 1999 with his push to repeal the Glass-Steagall Act and the deregulation of derivatives in 2000 as Treasury Secretary in the Clinton administration.
Ms. Cat’s Chronicles 