VIDEO: Representative Marcy Kaptur Speaks on Floor of House for Glass-Steagall
July 25, 2013 • 10:26AM

Rep. Marcy Kaptur Speaks in House of Representatives on HR129

Rep. Marcy Kaptur (D-OH) gave a Special Orders speech on the floor of the House of Representatives on July 23, 2013, calling on Members of Congress to co-sponsor her bill to restore Glass-Steagall to end the destruction of the nation, contrasting the looting of Detroit to the massive profits of the looters, especially JP Morgan Chase. Her speech follows:

Mr. Speaker, in 1999, Congress, sadly, repealed the Glass-Steagall Act. That law had protected our Nation for over seven decades against wild speculation by Wall Street investment houses and financial giants.

Marcy Kaptur (D-OH), sponsor of HR 129 to restore Glass-Steagall.

When the floodgates were removed between prudent banking and speculative abandon, again, Wall Street gambled with the money of the American consumers. Look where it took us, into the worst recession since the Great Depression, into a world where we've had the largest transfer in American history of wealth from Main Street to Wall Street; and the flood continues.

Now, your savings deposits and certificates of deposits earn almost no interest. Guess who's making money off your money?

In commemoration of the 80th anniversary of enactment of the Glass-Steagall Act, Congress must adopt the Return to Prudent Banking Act of 2013, H.R. 129. I invite all Members to cosponsor our bipartisan bill to reinstall the floodgates that protected the public from Wall Street greed....

The Glass-Steagall Act, or Banking Act of 1933, was signed into law during the Great Depression in an effort to restore order and stability to the banking system. Representative Henry Steagall and Senator Carter Glass wrote the law and, through its passage, the Federal Deposit Insurance Corporation was created. The law prevented commercial banks from trading securities with deposits from their clients.

After its repeal in 1999, the Wall Street banks, true to form, again created false money with abandon. They used that false money to purchase more mortgage-backed securities, which were packaged into collateralized debt obligations.

Most Americans couldn't even define what these instruments were, but Wall Street giants ended up fleecing them by gobbling up an average of 20 percent of the value of their home equity.

Lack of regulation allowed Wall Street to gorge themselves past sustainable ratios. They manipulated consumer mutual funds and pension accounts of American workers, thus ensuring that Americans were on the hook for when the housing bubble burst.

Sandy Weill, who helped invent these mad practices, as the former chairman and CEO of Citigroup, in a major reversal, stated on CNBC, in support of restoring Glass-Steagall, "What we should probably do," he said, "is go and split up the investment banking from regular banking, have banks be deposit takers, have banks do something that's not going to risk taxpayer dollars."

Boy, I wish he'd thought about that before he did it.

Wall Street turned our strong banking system into a haven for speculators. They threw caution to the wind, displacing prudence with greed. These money men gained massive profits for the bank. By and large, the American public was unaware of their backroom dealing. But Wall Street took hard-earned Americans' dollars to gamble on complex and risky instruments like derivatives, and then filled the gap with the lost equity of the American people's homes.

We now see enormous accumulation of banking assets and vast financial power in a handful of powerful institutions like JPMorgan Chase, Goldman Sachs, BlackRock. They are making enormous profits, larger than ever, as a result of the American people having bailed them out. Indeed, they are yielding the highest profits in our Nation, in addition to the oil companies.

Fifteen years ago, the assets of these six largest banks were approximately 17 percent of gross domestic product. Today, estimates for their assets are over half of GDP. So six institutions control an enormous and growing percentage of our banking system and economy. And in turn, our Nation's future is placed at their doorstep.

This is too much power in too few hands. The American people are feeling it in the restriction of credit, the sluggishness of the housing market and its depreciated values, the lack of interest paid on savings deposits and certificates of deposits, in the economy's sluggish growth, and the lack of competitive capital opportunities. In effect, the American people are subsidizing them.

In 2012, JPMorgan Chase reported record net revenue of $21.3 billion, compared to the $19 billion they made in the previous year. For the third consecutive year, the banking giant recorded a record net income.

Total revenue for JPMorgan Chase in 2012 was nearly $100 billion. That would fully fund the Department of Transportation, NASA, the National Science Foundation, and even bail out Detroit.

Yes, let's look at Detroit. This weekend we saw the city of Detroit file for bankruptcy. The news stories report Detroit is $18 billion short, about a third of it in its pension funds.

Well, look at what the financial crisis took from the citizens of Michigan, over $180 billion, 10 times more than the debt that the city of Detroit is juggling, $180 billion in lost property value in Michigan alone.

Who should pay Detroiters in Michigan back for what was taken from them? And what was taken is the value of their property. Now there's a math problem for you.

I would say to my colleagues, please join us in sponsorship of H.R. 129. Let's put prudence back into banking, and keep the speculators out.