Former Fed Governor Thomas Hoenig
Delivers a 'Primer' on Glass-Steagall
April 19, 2013 (EIRNS)Former Federal Reserve Governor Thomas Hoenig, currently the vice-chairman of the Federal Deposit Insurance Corp. (FDIC), gave the featured dinner presentation at the 22nd annual monetary policy conference of the Levy Institute of Bard College on April 17. As his speech shows, he took the occasion to provide a useful "primer" on the historical hows and whys of the Glass-Steagall banking regulations, in contrast to the disastrous effects of Gramm-Leach-Bliley between 1999 and the 2007-08 crash.
Hoenig was crystal clear about the fact that it was the abolition of Glass-Steagall in 1999 which led to the 2007-2008 crisis, which wracks the world financial system to this day.
Indeed, EIR's representative at the event reported that the dominant mood in the audience of several hundred academics, bankers, and regulators was one of deep anxiety, and recognition that nothing had been done since the 2007-2008 financial crisis to prevent a new blowout of even greater magnitude.
Hoenig himself has been warning of the potential for the outbreak of such a crisis, since at least September of 2012.
The question is whether the current mobilization to reinstate Glass-Steagall, led by Lyndon LaRouche PAC, will succeed in time. Currently HR 129, the Return to Prudent Banking Act, which would restore Glass-Steagall, has 56 sponsors, and broad mass support, but has not yet been introduced into the U.S. Senate.