Facing an unexpectedly tough challenge to hold onto his seat, Democratic Sen. Jeff Merkley has called on help from his good friend, Sen. Elizabeth Warren. Merkley and Warren appeared together at a fundraiser in Portland in late May of this year for the ongoing Merkley reelection campaign, charging “grassroots” supporters $100 per ticket. Warren later made a scheduled appearance at Powell’s Books to promote her new book, A Fighting Chance.
Warren told the crowd she needed Merkley reelected to help her take on the big banks. But Warren, sponsor of the 21st Century Glass-Steagall Act (S.1282), did not mention this legislation until prompted by me during the canned question period. Warren lit up, “Somebody is doing their homework!” she said. “Thank you for paying attention.”
Sensing the incredible support she had in the room, Warren then spoke freely of something she understands very well. She unleashed a strong 6–7 minute steamroller on Glass-Steagall, which provoked a standing ovation by the 200 people present.
Her signature 21st-century Glass-Steagall is widely supported by the population, including 26 members of the Oregon State Legislature, which filed Senate Joint Memorial 11, which “urges Congress to support efforts to reinstate separation of commercial and investment banking functions in effect under the Banking Act of 1933.”
Glass-Steagall, that is, the Banking Act of 1933, was a New Deal-era law enacted to remove the shackles of Wall Street speculation from the U.S. economy and launch a program of reconstruction of the U.S. productive economy. Chief sponsors were Sen. Carter Glass and Rep. Henry Steagall. Warren said of the gradual elimination of Glass-Steagall, beginning in the late 1980s and ending in its repeal in 1999, that “this is what created ‘too big to fail,’” and “anything goes in banking,” and that those banking conglomerates were now “38 percent bigger than when the government bailed them out unconditionally in 2008.” They have, in addition, committed serious financial crimes without punishment.
She described her 21st-Century Glass-Steagall Act, co-sponsored by Senators John McCain (of all people), Maria Cantwell and Angus King, thus, “First, it will break the biggest banks up, and it is really only the biggest Wall Street banks that will be affected by this; and second, it will make the large, insured deposit-banking units use their resources on economic lending, otherwise, no support.”
Ridiculing Obama’s and Geithner’s “bailouts with no conditions,” Warren recalled that she had taught bankruptcy law. When new money is put into a firm in bankruptcy, “the stockholders get wiped out; the bondholders take a haircut; the top management is removed and may be prosecuted.
Warren said the big Wall Street financial firms don’t like the Glass-Steagall legislation. She concluded, “What kind of a country do we want to work for? What kind of a future do we want to have? Do we want to work for Wall Street banks, to make them even bigger? Or do we want to work for our children and grandchildren to have a fighting chance?”
During her initial presentation, Warren had criticized President Obama for choosing the side of the banks since the 2008 crisis. During her Glass-Steagall speech, she heaped scorn on Attorney General Eric Holder’s claim a week earlier that now, at last, banks (foreign ones, at least) were not too big to jail. “I’ll believe it when I see one go to jail,” Warren said. “These banks have broken the tax laws; they have broken the drug laws; they have broken the money-laundering laws; they have broken the securities laws; and I have not yet seen anyone arrested.”
Afterward, many frustrated citizens turned around to thank me for bringing this up, and a few citizens approached me to voice their concerns and their disappointment with both senators’ failure to discuss the war dangers we are facing, as well as the reluctance of both Senators Merkley and Wyden to discuss Glass-Steagall—the remedy to this criminal economic system.
By the end, 100 leaflets on Warren’s bill, bolstered by a quick little primer on real economy, were distributed, which included both Merkley’s and Wyden’s contact number on the bottom of the sheet. This had a singular ability to excite Merkley’s base around this fight, but little did they realize that Merkley is nowhere to be found on Warren’s 21st Century Glass-Steagall act, even though he sits on the Senate Committee on Banking and identifies himself as Warren’s close ally.
This crucial experiment on the use of leadership in transforming a political process increasingly dominated by irrational fears has demonstrated to me the great potential we have for creating a future unshackled from the routine of current political industry.