Rep. Chellie Pingree (D-Maine) today told a hearing on swaps and futures swindles, held by the 46-member House Committee on Agriculture, Nutrition and Forestry, that she wanted to go on record as in favor of restoring the Glass-Steagall law. Pingree is one of seven members of the Committee who are signators of H.R. 1489, the Return to Prudent Banking Act, to restore Glass-Steagall. The hearing was titled "Oversight of the Swaps and Futures Markets: Recent Events and Impending Regulatory Reforms." The CFTC has oversight over the U.S. futures, swaps and derivatives market, and itself is under oversight of the Agriculture Committee.
The four-hour proceedings also included several members zeroing in on how the NY Fed (during Geithner's chairmanship), in 2007-08, did not contact the CFTC or other enforcement authorities on the LIBOR rate-rigging. Rep. Randy Neugebauer (R-Texas) participated in this questioning, as well as at today's hearing in the House Finance Committee.
Pingree began her remarks by telling the Committee that even Sandy Weill this morning said on CNBC, as carried in the New York Times, that the "big banks should be broken up." Pingree made her point about Glass-Steagall while questioning the first witness, Gary Gensler, Chairman of the Commodities Futures Trading Commission, who led off the four hour hearing,
Pingree said during her 5-minute interchange with Gensler, that there has been a "change of opinion" taking place, of how to conduct regulation, namely by having a "more robust version." Gensler replied in apparent agreement, that, "we need common sense rules of the road. If banks fail, they should have the freedom to fail." Then, after a short exchange over "when is portfolio trading really betting on the markets," as they worded it, Pingree pointed out that, "given how confusing this is, why not say that the Volcker Rule is not going far enough, and do what Weill said." She said, look at all the years this has been going on. Now it's time to, "just break up the banks."
Committee Chairman Frank Lucas (R-Oklahoma) then interjected, that, yes, I think you are referring to, in the 1930s, that this was done under Glass-Steagall.
Pingree said, "For the record, I am in favor of Glass-Steagall. Again referring to Sandy Weill, she said that, "We should reinstate Glass-Steagall." Gensler replied that, "I think if any of the banks fail," they should not be bailed out by the public.
Rep. Peter Welch (D-Vermont), another co-signer of HR 1489, was the next to question Gensler. Welch began his remarks by echoing Pingree's point that the Volcker Rule can't do the job, saying that "too big to fail means too big to regulate."
Rep. Collin Peterson (D-Minnesota), the ranking Democrat, and long-time former Committee Chairman, also a signator on HR 1489, did not re-iterate his support for Glass-Steagall, but did include in his opening remarks, a denunciation of the Commodities Futures Modernization Act of 2000, the companion law to the 1999 Graham-Leach-Bliley act which repealed Glass-Steagall. He said that the CFMA Act deregulated futures markets, giving "legal certainty" to swaps, which went from $80 billion to $600 trillion in 8 years. "This is gambling. We gave it legal certainty. Look at what we did. When we did Dodd-Frank, we didn't bite the bullet."
Peterson zeroed in the fact that the NY Federal Reserve presided over the LIBOR rate rigging. The CFTC was not contacted on the infractions. He said, "The whole damn system is set up to benefit Wall Street. I'm tired of it."
The content of the Agriculture Committee hearing covered the LIBOR rate-setting swindle, including the cover-up role by the N.Y. Fed (Geithner), the wild betting on the Chicago Mercantile Exchange, and the cases of two licensed trading entities, MF Global and Peregrine (PSBG), going bust and losing multi-millions of clients funds on account, especially farmers, independent grain dealers, and others. Witnesses included Terrence Duffy, Chairman of the CME Group (the Merc), who feigned contrition.