Former Delaware Senator and continuing Glass-Steagall booster Ted Kaufman has a big blast against Dodd-Frank, and push for Glass-Steagall in The Hill today, under the headline: "Dodd-Frank Needs to be Amended in Order to Stop Another Meltdown."
Kaufman first demonstrates conclusively that the "bigger than ever" banks have not only not reduced, but grown in size, their combined assets having gone from 43% of GDP in 2007 to 56% in 2011. Not only that, but the continuing implicit government support gives them an average 0.8% edge in borrowing rates, amounting to, in the case of JP Morgan, a $14 billion advantage in the last year. On the "second question" as to whether Dodd-Frank is working — JP Morgan's recent "multi-billion" losses show that it hasn't.
Dodd-Frank had a two-pronged approach: New rules from SEC and CFTC, and the Volcker Rule. Neither has been effective, Kaufman says. He reminds readers that Volcker was introduced only as a substitute for the Glass-Steagall Act, and observes that the "megabanks" then turned untold millions to "water it down" still further.
"It is clear to me that Dodd-Frank, however good its intentions, has not and will not protect us against another meltdown," Kaufman says. "Solutions such as reinstating Glass- Steagall or enacting Brown Kaufman [an amendment to limit bank size] are clearly available and desperately needed. As we read more in the next few weeks about the unfolding LIBOR scandal or some inevitable new outrage about a rigged and dangerous financial system, perhaps enough people will begin to demand the kind of decisive legislative action I fought for back in 2010."