The two greatest periods of wealth inequality in the United States (the 1920s and today) have one critical element in common – there was no Glass-Steagall Act. The absence of the Glass-Steagall Act allows Wall Street banks to use the savings of small depositors across the United States to fuel risky speculation on Wall Street and create the super rich. After the Wall Street crash of 1929 and the onset of the Great Depression, the Glass-Steagall Act became law and put an end to this institutionalized wealth transfer system from the legislation’s enactment in 1933 until its repeal in 1999 under the Presidency of Bill Clinton.
Today’s banking system is a perfect reflection of U.S. society. Just six banks (one-tenth of one percent of the 6,000 insured-depository banks in the U.S.) control the bulk of total assets while, as Senator Bernie Sanders regularly reminds his audiences, in American society “the top one-tenth of one percent owns almost as much wealth as the bottom 90 percent.”
The U.S. Treasury’s Office of Financial Research produced a study in March of this year that made two critical findings. First, that “credit derivatives exposures were at the core of the 2008-09 financial crisis.” Second, the study found that just six banks constitute “the core” of the U.S. financial system.
According to a March 31, 2016 report from the Federal Reserve, of the six mega Wall Street banks that make up the core of the U.S. financial system, just four of those banks (JPMorgan Chase, Wells Fargo, Bank of America and Citibank) hold $6.7 trillion in assets out of the $15.9 trillion total held by the other 6,000 commercial banks, or 42 percent of the total.
According to the World Bank, last year’s world GDP for 195 countries totaled $73.4 trillion. Why would five Wall Street banks need to hold more than three times the entire world GDP in derivatives?
Currently, there is no Wall Street banking regulator that can competently answer that question
Who Believes Hillary will now undo everything her husband did back then?