Send Congress Back To Enact Glass-Steagall Law; Lame Duck Is Too Late
Oct. 6 (EIRNS)—Americans should not tolerate a Congress that held hearings on “getting tough with Wall Street,” and then went into recess for months while Wall Street mugs bank depositors, small businesses, mortgage holders and working people every day.
The Wall Street giants are looting their deposit/lending banks, pumping up their speculative casino units and heading for a financial blowout triggered by the bankrupt European banking giants. Today a new scandal emerged of Wells Fargo cheating small business clients of its retail brokerage division; and a new exposé of Deutsche Bank creating many derivatives contracts meant to “disappear” assets or liabilities from its balance sheet, in the manner of Enron. Deutsche Bank’s world-largest mass of derivatives is also classified as the world’s most dangerous, capable of taking scores of big banks into the crash with it.
Millions of Americans now realize—and just in time—that re-enacting Franklin Roosevelt’s Glass-Steagall Act is the unique way to stop the burgeoning criminal activity of the likes of Deutsche Bank and Wells Fargo, and restore a sound banking system before it becomes too late for the U.S. economy.
Now is too late for hundreds of members of Congress to be giving out the vague impression that they’d “like to” break up the Wall Street banks. The American people have to make them return to Capitol Hill and do it, by restoring Glass-Steagall.
Those who think that only another 2008 crash will finally push the nation’s elected officials to restore FDR’s policies, must think again. It will push them, instead, into another, bigger, panicked bank bailout, more deeply impoverishing the economy and the American people. They must be brought to enact Glass-Steagall before that crash takes place.
That will only begin the work of reviving growth, productivity, productive employment in the U.S. economy, after 15 years of failure by Bush and Obama. But it will create the opportunity for Rooseveltian national credit policy, new infrastructure development, accelerated scientific progress and a revived space exploration program.
But Glass-Steagall and a new economic paradigm are now life or death. Obama’s failed economic growth, defeat on trade agreements, and Russia’s strategic success in Syria are driving the White House toward direct provocation of war with Russia. There is tremendous opposition in Europe and Asia, but “planning” for what may become World War III is underway in the Obama White House and Defense Department.
Tell Congress—in their districts for a grim no-choice election, to return and enact the legislation necessary to pull the country out of this crisis, legislation informed Americans are demanding. The lame duck is too late; do it now.
COLLAPSING WESTERN FINANCIAL SYSTEM
Wells Fargo Ripoffs Are Even More Widespread
Oct. 6 (EIRNS)—It should come as no surprise that the Wells Fargo practice of ripping off customers is even more widespread than what the bank admitted to in its settlement with the Consumer Financial Protection Board (CFPB). In addition to millions of phony accounts that Wells Fargo bankers created for consumers, there are now reports of similar practices for small businesses and retail brokerage customers.
Sen. David Vitter (R-LA) has reported that there were at least 10,000 small business customers of Wells Fargo who were sold accounts and services that they neither needed nor ordered. TheCharlotte Observer also reports that brokerage customers had accounts liquidated and then reopened, for which they were charged fees.
Public Citizen has a report that, though the CFPB limited its purview to just the 2011-2016 period, Wells Fargo had pursued this fraudulent “cross selling” strategy since 2000.
All this goes to show, if further proof were needed, that the Wall Street and similar banks are thoroughly and completely corrupt and only function by stealing from anyone they can.
The corruption also makes them bankruptcy candidates. Today even the City of Chicago joined the States of Illinois and California in pulling all investments out of Wells Fargo, due to the stinking scandals. Enough large investors suddenly “running” from the bank could pull it down, hitting the rest of Wall Street as well.
Another strong argument for Glass-Steagall and LaRouche’s Four Laws.
‘Enhanced Repos’ the Latest Corruption Exposed at Deutsche Bank
Oct. 6 (EIRNS)—The alarmingly sinking Deutsche Bank announced 1,000 more job cuts this morning; without government intervention to break the bank up, the death spiral which has set in, of the bank’s revenues falling faster than costs can be cut, will eventually bankrupt it, if a blowout of its huge derivatives exposure doesn’t destroy its liquidity first.
Britain’s Telegraph: “Deutsche Bank Is Latest Victim of America’s Treasury War,” which makes a reference to Treasury’s War: The Unleashing of a New Era of Financial Warfare by Juan Zarate, the first assistant treasury secretary on terrorist financing and financial crimes. The Telegraph columnist says Deutsche Bank is not in danger of immediate failure, but if its revenues keep falling faster than its ability to cut costs, and German government does not act, it will fail. It cannot raise capital until the fine is finally settled, or Treasury will take the capital raised.
As negotiations continue in Washington between CEO John Cryan and U.S. Justice Department officials, over the size of a huge fine of the bank for mortgage-backed securities fraud leading to the 2008 financial crash, CNBC reported late Oct. 5 that German government officials are taking part in those negotiations by telephone and in person. Today the German Finance Ministry denied this, as it has all other reports of its activities in the deepening Deutsche Bank crisis.
But now, yet another scandal, and potential financial crime, has been added to Deutsche’s very long list, as reported in Bloomberg News Oct. 6. Prosecutors in Italy have already charged the bank and some of its executives with creating fraudulent derivatives contracts for the sinking Monte dei Paschi di Siena (MPS) bank in 2008, enabling MPS to hide billions in losses and conceal its condition from regulators and stockholders. The derivatives ended up being ruinous for MPS’s financial condition.
Bloomberg reported that the prosecutors have found that Deutsche Bank created these “enhanced repos,” not once, but 103 times, for dozens of clients. And the German bank regulator BaFin discovered that Deutsche Bank “mismarked”—i.e., misrepresented the nature of—these repos, or repurchase agreements. Repos are a form of loan, but “in an attempt to clean up balance sheets,” Deutsche Bank converted them to derivatives.
The intent—to hide assets or liabilities of financial institutions “off the books,” recalls the criminal practices of Enron, and the suicidal practices of Lehman Brothers. According to Bloomberg, “the widespread use of a transaction that’s now the subject of a criminal case, highlights the lenders’ appetite for complexity,” and why “mounting legal costs have become a source of increasing concern to investors, driving shares to a record low.”
The existence of this new scandal—and the fact that Deutsche Bank has been charged with illegal and immoral activities, over and over, in just about every imaginable area of financial speculation—may also explain why the U.S. Department of Justice is demanding so large a fine, $14 billion, in the mortgage securities case against the bank.
MEP De Masi: Bank Separation and Controlled Bankruptcy of Toxic Investment Banking Starts with Deutsche
WIESBADEN, Oct. 6 (EIRNS)—Die Linke party European Parliament member (MEP) Fabio De Masi issued a press release today charging that Chancellor Angela Merkel’s statement that no taxpayer money would go to bail out Deutsche Bank is not credible, as “Zombie banks like Deutsche Bank are too big and too interlinked to fail.” The European Commission (EC) must speak the truth on the systemic dangers related to Deutsche Bank, says De Masi, and he puts forward an approach to Deutsche Bank coherent with Lyndon and Helga LaRouche’s policy proposal to save the bank two months ago.
De Masi’s comments are in support of his Euro Parliament faction’s demand for the EC to face up to the fact that “Deutsche Bank is the most dangerous bank in the world.” “The majority factions in the EP continue to block rigorous bank reform, as with a separation of investment banking from the classic credit and deposit activities. This is necessary to put in place a firewall for the financial system, so that a controlled bankruptcy of toxic investment banking can take place.”
“Tax money,” De Masi says, “must only be used to recapitalize the real economy-oriented credit and deposit business. The deployment of taxpayer money should only occur with those banks becoming public property, including a strict regulation of the business model. The preconditions for a breakup, and dismantling of the investment bank division of Deutsche Bank must be immediately created.”
De Masi works with a cross-party grouping whose members are working within their home countries for the equivalent of Glass-Steagall. Although little is expected from the European Parliament and Commission, they represent breakout potential at the national level which can help trigger brushfires for a Glass-Steagall standard throughout Europe.
STRATEGIC WAR DANGER
Russia Issues Warning to U.S. Against Adventurism in Syria
Oct. 6 (EIRNS)—Issuing a stern warning to the Obama Administration on its increasing anti-Russia belligerence exhibited openly over Syria, Russian Defense Ministry spokesman Gen. Igor Konashenkov said in a briefing today that “any missile or air strikes on the territory under control of the Syrian government will pose an obvious threat to the Russian military,” TASS reported. “Most officers of the Russian Center for Reconciliation of the Warring Parties currently work on the ground, delivering humanitarian aid and conducting negotiations with heads of settlements and armed groups in most Syrian provinces. That is why any missile or air strikes on the territory under control of the Syrian government, will create an obvious threat for Russian military. And finally, I draw attention of ‘hotheads’ [to the fact] that after a strike on Syrian troops in Deir ez-Zor by planes of the coalition on Sept. 17, we have taken all necessary measures to rule out any such mistakes against Russian military and military facilities in Syria,” Konashenkov said.
Another news item by Reuters, citing a statement of the Russian Defense Ministry conveyed the same message to Washington. It said, “The United States should carefully consider the consequences of strikes on Syrian army positions, because such strikes would obviously threaten Russian servicemen.” “Commenting on Russia’s S-300 air defense complexes recently deployed to Syria, the Ministry said in a statement that their crews would hardly have time to detect the exact flight paths of missiles or from what direction they were launched.”
Danger of U.S.-Russian Military Confrontation over Syria
Oct. 6 (EIRNS)—Gernot Erler, Chief Coordinator of the German Government for Relations with Russia, warned on ZDF-TV last night: “After the development in the Syria conflict since Monday, the danger of a direct confrontation between the United States and Russia cannot be ruled out. There are a whole set of signals from Russia showing that it is not afraid of any confrontation at this moment.”
Erler mentioned the suspension of the plutonium deal by Russia, and the stationing of Russian S-300 and S-400 air defense systems in Syria, as being a clear warning addressed to the United States not to increase military actions in Syria.
“This shows it is an extremely critical situation,” Erler said. “We hear from Washington D.C. that presently, a military response is being deliberated on, along with diplomatic, secret intelligence, and economic options.”
U.S. POLITICAL AND ECONOMIC
Rep. Walter Jones Letter to Speaker Ryan: ‘Don’t Change JASTA!’
Oct. 6 (EIRNS)—Rep. Walter Jones sent this letter to House Speaker Paul Ryan (R-WI) on Oct. 5, and released it to the public. The emphasis is in the original:
The Honorable Paul D. Ryan
Speaker of the House of Representatives
H-232 U.S. Capitol Building
Washington, D.C. 20515
Dear Mr. Speaker:
Last week, the House and Senate successfully voted to override President Obama’s veto of the Justice Against Sponsors of Terrorism Act (JASTA). In the first successful override of the Obama Administration, Congress did what President Obama failed to do: give 9/11 families the ability to seek justice against foreign governments that sponsor terrorism.
Our colleagues, Congressman Stephen Lynch and Congressman Thomas Massie, and I worked for over four years to declassify the 28 pages of the Joint Inquiry into the September 11 attacks. Those pages link Saudi Arabia to the 9/11 attacks by detailing substantial financial support from Saudi Prince Bandar bin Sultan and his wife to individuals linked to the 9/11 hijackers.
Our vote to override President Obama’s veto was a victorious moment for 9/11 families and justice. However, I was disappointed to read shortly after the vote that some in leadership are suggesting a modification or “weakening” of JASTA. This would be a huge mistake. JASTA is a carefully crafted bill that is the result of many years of hard work and negotiation by a vast majority of Congress. If leadership wanted changes in the bill, it should have been addressed prior to the override.
Additionally, Members of Congress are elected to represent their constituents, not so-called “allies” in foreign states. The Kingdom of Saudi Arabia continues to engage in a massive lobbying campaign against JASTA, and we must not fall for it. I implore you to stand up for 9/11 families and resist calls to modify JASTA.
Thank you for your time and consideration. I look forward to your response.
Walter B. Jones
Member of Congress
North Carolina 3rd District, Republican
THE NEW GLOBAL ECONOMIC ORDER
China Won’t Take ‘No’ for an Answer on South American Bioceanic Railway
Oct. 6 (EIRNS)—“For the very first time, a railway spanning the South American continent is now in the works,” China’s CCTV reported in a Sept. 24 news clip promoting the “ambitious transcontinental railway between Brazil and Peru” which China is determined to help build. “When completed, it would push the economic growth of both sides to another level of high-speed,” CCTV emphasized.
Peru’s Wall Street banker-President Pedro Pablo Kuczynski (“PPK”) and his Minister of Transportation admitted after their meetings with Chinese officials during the Sept. 4-5 G20 Summit in Hangzhou, that China is very interested in building the bioceanic railroad, but said that the project is too costly, environmentally problematic, and not necessary for Peru. PPK’s “no” apparently didn’t get translated into Chinese—or at least the Chinese are acting as if they never heard it. Peruvian diplomatic sources told EIR in recent days that China will present its preliminary study for the train in November, and they intend to build it. The terms of the concession are being discussed, but it’s “a done deal.” According to one source, China is opting for the northern (Brazil-Peru) route first, but the southern (Brazil, Bolivia, Peru) route would follow.
Major Peruvian institutions are mobilizing for both the northern and southern routes. The national Association of Economists of Peru adopted the bioceanic train as the main subject of its upcoming 23rd National Congress, which will be held in Pucallpa, Ucayali (situated in the Amazon area of Peru, along the northern rail route), simultaneous with the Asia Pacific Economic Cooperation (APEC) Summit in Lima on Nov. 17-18. Instead of the usual monetarist nonsense, the poster for the Congress announces:
“The bioceanic train, as the axis of and bridge to economic development, will have a positive impact on the economic and social growth of the Amazon region and of the country.” Every sector of the economy—from mining and agriculture, industry, power generation, and construction, to transportation, education, and health—will be activated. International experts estimate the social and economic benefits of the project are three to five times greater than the cost of construction.
“Even more, the high-speed (300 km/hr) Bioceanic Train … is the perfect route linking industrial, scientific and technological development and economic prosperity, since it involves a higher idea of growth and development based on the concept of the ‘Economic Development Corridor.’ ”
EIR’s chief correspondent in Lima, Luis Vasquez, is featured as the first speaker at the congress, on “Economic Development Corridors and South America’s Integration with the BRICS.”
Schiller Institute and BüSo party founder Helga Zepp-LaRouche, “wife of U.S. political activist Lyndon LaRouche … and creator of the concept of the Productive Triangle and the Eurasian Land-Bridge,” will also address the congress, on “The New Silk Road Concept, Facing the Collapse of the World Financial System,” the poster also reports.
Sri Lankan Prime Minister: India and China Are the Only Growth Engines in Today’s World
Oct. 6 (EIRNS)—Addressing the World Economic Forum (WEF) in New Delhi today, Sri Lankan Prime Minister Ranil Wickremesinghe cited India and China as “the only countries that can drive economic growth across the globe,” and that manufacturing companies have no other place to go, Bernama news agency reported. Wickremesinghe made the remark two days after the IMF in its semi-annual report cautioned Indian banks on their vulnerability. By saying, “Indian banks are vulnerable to further decline in profits as they face slow credit growth and elevated non-performing assets,” the IMF is, in essence, suggesting that India should tighten credit and lower its growth rate.
“Banking systems are vulnerable to further declines in growth or profits, particularly in countries at later stages of the credit cycle (such as India), where slowing credit growth and risks from elevated levels of non-performing loans are most acute,” said the IMF Global Financial Stability Report, the Indian Express reported.
At the WEF, Wickremesinghe, critical of the West’s economic policies, said “the rules on globalization were written by the West, and we have only played by it. When people here went and deposited part of their funds and assets in Western countries, no one complained. When their own people (Western countries) started going to Switzerland, they started complaining,” he continued. “Asia will bail the world out…. Otherwise, we create our own systems here [Asia]. A very, very stable system,” he stressed.
“(The) World Economic Forum in Delhi this year says the world is expecting India to translate potential into action…. We are at the threshold of another historic moment. If the pace of reforms fails to pick up, companies may look elsewhere. Where, elsewhere? It has to be India or China. That’s the hard truth. There is no other place to go today,” he said.
BAE Systems, A Power Behind House of Windsor, Defies Parliament
Oct. 6 (EIRNS)—One of the House of Windsor’s long-serving monarchies, the House of Saud, is now in talks with BAE Systems, which relies on the Saudi regime for more than one-fifth of its revenues, on providing training, support, and upgrades for its Hawk aircraft. BAE also hopes to sell 48 Eurofighter Typhoon jets for a reported £4 billion (about $5 billion) under a separate deal. The deal is a part of an existing five-year program between BAE, Saudi Arabia, and the U.K. government, but the British MPs had invalidated the contract because of “war crimes by the Saudis using British-made weapons in war-torn Yemen,” the Independent reported today.
Last month, MPs called for a halt to British arms exports to Saudi Arabia, pending an investigation into reported breaches of humanitarian and human rights laws using British-made weapons. “In a report seen by BBC’s Newsnight’s Gabriel Gatehouse, the Committees on Arms Export Controls said: ‘The weight of evidence of violations of international humanitarian law by the Saudi-led coalition is now so great, that it is very difficult to continue to support Saudi Arabia,’ ” the Independent wrote.
It is evident that BAE Systems has support at the highest level within the U.K.—and it is the House of Windsor. BAE Systems, in a trading update today, issued a note that “Discussions between BAE Systems, the U.K. government, and Saudi Arabia are progressing, to define the scope and terms of the next five-year Saudi-British Defense Co-operation Program.”