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Monthly Archives: November 2013

Elizabeth Warren and the 21st Century Glass-Steagall Act.

This article was initially posted under a different headline and has been edited for content.  The topic was suggested by a reader.

Don’t you hate the big banks?  The ones that crashed the economy in ’08, only to be bailed out by the government, with our money.  The ones which flourish with record profits today only by the unconscionable abuse of the privilege of ownership, their collective ownership, their literal ownership, of the Federal Reserve.  Don’t we all hate that Fed Bank Cartel?  That hateful collection run by names such as Jamie Dimon, Lloyd Blankfein, et. nauseum, whose only supposed “Regulator” is the Fed itself (which, did I mention they own, literally). With the revolving-door policy of a U.S. Treasury distinctly disinterested in the Public Interest, this private Fed Bank Cartel has, by law and statute, absolute full control of monetary and currency policy and supply, and by brazen corruption and chutzpa, it has chosen to use those powers to create unto itself, to themselves and directly into their own financial institutions, unlimited amounts of new free, digitally created, zero interest rate money “for the foreseeable future” or until the official (officially manipulated, that is) unemployment rate happens to drop below some arbitrary and flexible benchmark.  Those banks.  Those that used the power of their cartel, the Federal Reserve, to suspend accounting rules so their balance sheets might show solvency and their multi-quadrillion dollar shadow banking universe, their massive inventories of securities fraud, might have time to be laundered into respectability (well, into Money Supply anyway).  Don’t you hate the way they have used all that power and money to create wealth only for themselves, wealth far beyond imagining, all while preying and feasting on us consumers and citizens, taking our properties and our assets, enslaving us to debt and bankruptcy and poverty, pushing for public austerity, more privatization, more taking.  Don’t you?

And don’t you wish you had an advocate within the government, someone you could count on to keep your best interests at heart?  Someone whose whole personal schtick is to represent the consumer.  Hey, how’s about Senator Elizabeth  Warren, D-MA?  The Consumer Financial Protection Bureau was her brainchild, don’tcha know.  And a solid advocate for friendlier student loan rates she was, rallying behind a plan to tie student loan interest rates to the rate on Treasury Securities, though that one never quite went anywhere either.

In July of this year, as co-author with John McCain, R-AZ, and two other senators (Maria Cantwell, D-WA and Angus King, I-ME), Elizabeth Warren wrote a bill that will end too big to fail and cut those banks down to size!  Just ask her, check out her own website, or read any mainstream coverage you might be able to find about this matter.   Warren and McCain modestly chose not to name it after themselves; instead, they decided to call it the “21st Century Glass-Steagall Act”.  I suspect that they are cognizant of the fact that many people, even those not usually conversant with financial lingo, have become  somewhat familiar with the names Glass and Steagall and know that the overturning of this Act during the Clinton administration played a big part leading up to the blatant crime-wave called the “financial meltdown of ’08”.  So this bill, the New Glass-Steagall, must be righteous.  It is now garnering attention from the mainstream press, which is breathlessly touting it as The Answer.  For example, Common Dreams just released this last Friday, “Senator Warren says ‘Pick Up The Slingshot’ Against Too Big To Fail Banks”, by Richard Long.

Sen. Elizabeth Warren, D-Mass., says that the problem of “too-big-to-fail” financial institutions has only gotten worse in the years since Congress passed financial reform legislation. That’s why she is calling on activists to step up the pressure on Congress to pass legislation that would erect a wall between retail banking activities and the kind of high-risk financial bets that contributed to the 2008 financial crisis.

“Today the four biggest banks are 30 percent larger than they were five years ago. And the five largest banks now hold more than half of the total banking assets in the country. Who would have thought five years ago, after we witnessed first-hand the dangers of an overly concentrated financial system, that the ‘too big to fail’ problem would only have gotten worse?” Warren said Tuesday afternoon during a conference sponsored by Americans for Financial Reform and the Roosevelt Institution. “It’s been three years since Dodd-Frank has passed, and the biggest banks are bigger than ever, the risk to the system has grown, and the market disruption has continued.” […]

http://www.commondreams.org/view/2013/11/13-6

I read that far and thought – wait, wasn’t she the one who was supposed to oversee the TARP program (“In the wake of the 2008 financial crisis, Warren served as chair of the Congressional Oversight Panel created to oversee the Troubled Asset Relief Program (TARP).” – http://en.wikipedia.org/wiki/Elizabeth_Warren)?  When she asks, “Who could have foreseen 5 years ago…..?”, one might assume that the question can be most correctly answered with, “Well, you, Elizabeth, you could have.”  Or done something to help.  But better late than never?  Let’s have a look.

Below is the full text of Warren and McCain’s 21st Century Glass-Steagall Act, taken from govtrack.  The text matches that available on her website as of the 17th of November, 2013.  http://www.warren.senate.gov/files/documents/Fact Sheet – 21st Century Glass-Steagall.pdf

Remember that this bill has only been introduced to committee and may be marked up and changed over time.  The text below is as it currently reads.  Govtrack gives the bill only a 6% chance of making it into law.  My notes are bracketed and in red.  Although a bit too long for this article, I encourage you to at least skim it over and check my margin notes (in red).  I’ve reproduced the entire document so there can be no question that this “Bill” resembles the language of an idea more than it does an actual proposed law; an idea that would do very little, an idea with no chance of ending too big too fail or breaking up the corrupt behemoths currently dominating our plutocracy.

113th CONGRESS

1st Session

S. 1282

IN THE SENATE OF THE UNITED STATES

July 11, 2013

Ms. Warren (for herself, Mr. McCain, Ms. Cantwell, and Mr. King) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

A BILL

To reduce risks to the financial system by limiting banks’ ability to engage in certain risky activities and limiting conflicts of interest, to reinstate certain Glass-Steagall Act protections that were repealed by the Gramm-Leach-Bliley Act, and for other purposes.

[“limiting” as opposed to “terminating”; and “to reinstate certain G-S Act protections”?  We’ll see.]

1. SHORT TITLE

This Act may be cited as the “ 21st Century Glass-Steagall Act of 2013 ”.

2. FINDINGS AND PURPOSE

(a) Findings

Congress finds that—

(1) in response to a financial crisis and the ensuing Great Depression, Congress enacted the Banking Act of 1933, known as the “ Glass-Steagall Act ”, to prohibit commercial banks from offering investment banking and insurance services;

(2) a series of deregulatory decisions by the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency, in addition to decisions by Federal courts, permitted commercial banks to engage in an increasing number of risky financial activities that had previously been restricted under the Glass-Steagall Act, and also vastly expanded the meaning of the “business of banking” and “closely related activities” in banking law;

(3) in 1999, Congress enacted the “ Gramm-Leach-Bliley Act ”, which repealed the Glass-Steagall Act separation between commercial and investment banking and allowed for complex cross-subsidies and interconnections between commercial and investment banks;

(4) former Kansas City Federal Reserve President Thomas Hoenig observed that “with the elimination of Glass-Steagall, the largest institutions with the greatest ability to leverage their balance sheets increased their risk profile by getting into trading, market making, and hedge fund activities, adding ever greater complexity to their balance sheets.”;

(5) the Financial Crisis Inquiry Report issued by the Financial Crisis Inquiry Commission concluded that, in the years between the passage of Gramm-Leach Bliley and the global financial crisis, “regulation and supervision of traditional banking had been weakened significantly, allowing commercial banks and thrifts to operate with fewer constraints and to engage in a wider range of financial activities, including activities in the shadow banking system.”. The Commission also concluded that “[t]his deregulation made the financial system especially vulnerable to the financial crisis and exacerbated its effects.”;

(6) a report by the Financial Stability Oversight Council pursuant to section 123 of the Dodd-Frank Wall Street Reform and Consumer Protection Act states that increased complexity and diversity of financial activities at financial institutions may “shift institutions towards more risk-taking, increase the level of interconnectedness among financial firms, and therefore may increase systemic default risk. These potential costs may be exacerbated in cases where the market perceives diverse and complex financial institutions as ‘too big to fail,’ which may lead to excessive risk taking and concerns about moral hazard.”;

(7) the Senate Permanent Subcommittee on Investigations report, “Wall Street and the Financial Crisis: Anatomy of a Financial Collapse”, states that repeal of Glass-Steagall “made it more difficult for regulators to distinguish between activities intended to benefit customers versus the financial institution itself. The expanded set of financial services investment banks were allowed to offer also contributed to the multiple and significant conflicts of interest that arose between some investment banks and their clients during the financial crisis.”;

(8) the Senate Permanent Subcommittee on Investigations report, “JPMorgan Chase Whale Trades: A Case History of Derivatives Risks and Abuses”, describes how traders at JPMorgan Chase made risky bets using excess deposits that were partly insured by the Federal Government;

(9) in Europe, the Vickers Independent Commission on Banking (for the United Kingdom) and the Liikanen Report (for the Euro area) have both found that there is no inherent reason to bundle “retail banking” with “investment banking” or other forms of relatively high risk securities trading, and European countries are set on a path of separating various activities that are currently bundled together in the business of banking;

(10) private sector actors prefer having access to underpriced public sector insurance, whether explicit (for insured deposits) or implicit (for “too big to fail” financial institutions), to subsidize dangerous levels of risk-taking, which, from a broader social perspective, is not an advantageous arrangement; and

(11) the financial crisis, and the regulatory response to the crisis, has led to more mergers between financial institutions, creating greater financial sector consolidation and increasing the dominance of a few large, complex financial institutions that are generally considered to be “too big to fail”, and therefore are perceived by the markets as having an implicit guarantee from the Federal Government to bail them out in the event of their failure.

[All the above, effectively a preamble, is no more than a reasonably accurate and uncontroversial summary, observations as it were, of the conflicts of interest, consolidations, etc., that have transpired since the Gramm-Leach-Bliley Act of 1999, which repealed Glass-Steagall, and the other various deregulations enacted by law or policy over the years.]

(b) Purpose

The purposes of this Act are—

(1) to reduce risks to the financial system by limiting banks’ ability to engage in activities other than socially valuable core banking activities;

(2) to protect taxpayers and reduce moral hazard by removing explicit and implicit government guarantees for high-risk activities outside of the core business of banking; and

(3) to eliminate conflicts of interest that arise from banks engaging in activities from which their profits are earned at the expense of their customers or clients.

[The short section above is the complete Stated Purpose of the Bill.  Below are the various provisions.]

3. SAFE AND SOUND BANKING

(a) Insured Depository Institutions

Section 18(s) of the Federal Deposit Insurance Act ( 12 U.S.C. 1828(s) ) is amended by adding at the end the following:

(6) Limitations on banking affiliations

(A) Prohibition on affiliations with nondepository entities

An insured depository institution may not—

(i) be or become an affiliate of any insurance company, securities entity, or swaps entity;

(ii) be in common ownership or control with any insurance company, securities entity, or swaps entity; or

(iii) engage in any activity that would cause the insured depository institution to qualify as an insurance company, securities entity, or swaps entity.

[The only actual provision of this entire Bill so far (“Sec. 3. Safe and Sound Banking (a) Insured Depository Institutions”) does no more than state that the FDIC shall not insure financial institutions which hold insurance, securities, or swaps entities or affiliates.  To what, if any, degree this is important to the Fed Bank Cartel banks, aka the “too big to fail’s”, is left to your own imagination, as FDIC is not the regulatory body for those banks, the Federal Reserve is.  Nor have any of them ever relied on the FDIC to reimburse their losses, neither for their own account, nor their depositors or investors. Nonetheless, depository financial institutions which maintain swaps, insurance, and securities business shall, by this Bill, no longer enjoy FDIC protections going forward.]

(B) Individuals eligible to serve on boards of depository institutions

(i) In general

An individual who is an officer, director, partner, or employee of any securities entity, insurance company, or swaps entity may not serve at the same time as an officer, director, employee, or other institution-affiliated party of any insured depository institution.

(ii) Exception

Clause (i) does not apply with respect to service by any individual which is otherwise prohibited under clause (i), if the appropriate Federal banking agency determines, by regulation with respect to a limited number of cases, that service by such an individual as an officer, director, employee, or other institution-affiliated party of an insured depository institution would not unduly influence the investment policies of the depository institution or the advice that the institution provides to customers.

[By virtue of its big “Exception”, the above does nothing.]

(iii) Termination of service

Subject to a determination under clause (i), any individual described in clause (i) who, as of the date of enactment of the 21st Century Glass-Steagall Act of 2013 , is serving as an officer, director, employee, or other institution-affiliated party of any insured depository institution shall terminate such service as soon as is practicable after such date of enactment, and in no event, later than the end of the 60-day period beginning on that date of enactment.

[This gives 60 days for executives of swaps, insurance, or securities divisions not granted “exceptions” to terminate their roles in the depository (FDIC) division.]

(C) Termination of existing affiliations and activities

(i) Orderly termination of existing affiliations and activities

Any affiliation, common ownership or control, or activity of an insured depository institution with any securities entity, insurance company, or swaps entity, or any other person, as of the date of enactment of the 21st Century Glass-Steagall Act of 2013, which is prohibited under subparagraph (A) shall be terminated as soon as is practicable, and in no event later than the end of the 5-year period beginning on that date of enactment.

[This establishes an administrative exit 5 years from now from swaps, securities, and insurance business lines for entities wishing to so exit those business lines, but actually imposes no requirements that they do so, except for the dubious objective of maintaining their eligibility for FDIC in their depository business. ]

(ii) Early termination

The appropriate Federal banking agency, after opportunity for hearing, at any time, may order termination of an affiliation, common ownership or control, or activity prohibited by clause (i) before the end of the 5-year period described in clause (i), if the agency determines that—

(I) such action is necessary to prevent undue concentration of resources, decreased or unfair competition, conflicts of interest, or unsound banking practices; and

(II) is in the public interest.

[Gives agencies discretionary power, but no requirement to act on that, to provide for the termination (before the end of 5 years from enactment of the Bill) of those swaps, insurance, or securities activities in a financial institution.]

(iii) Extension

Subject to a determination under clause (ii), an appropriate Federal banking agency may extend the 5-year period described in clause (i) as to any particular insured depository institution for not more than an additional 6 months at a time, if—

(I) the agency certifies that such extension would promote the public interest and would not pose a significant threat to the stability of the banking system or financial markets in the United States; and

(II) such extension, in the aggregate, does not exceed 1 year for any one insured depository institution.

[Sets up language by which agencies may elect to extend, beyond 5 years from enactment of the Bill, the time by which affected financial institutions must exit swaps, insurance, and securities business or face the loss of eligibility to FDIC, i.e., the means by which a “too big to fail” bank may be declared “too big to lose FDIC”.]

(iv) Requirements for entities receiving an extension

Upon receipt of an extension under clause (iii), the insured depository institution shall notify its shareholders and the general public that it has failed to comply with the requirements of clause (i).

[And that’s all the real meat in the Bill.  Can I hear a “Where’s the Beef?” The balance of this Bill is: cursory Definitions pertaining to what constitutes swaps, insurance, securities, and depository banking, and corresponding modifications to certain related pieces of existing legislation; and Limitations (effective 5 years from now) on defined activities for those institutions, if any, which elect to retain FDIC for their depository businesses.]

(D) Definitions

For purposes of this paragraph, the following definitions shall apply:

(i) Insurance company

The term insurance company has the same meaning as in section 2(q) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(q)).

(ii) Securities entity

Except as provided in clause (iii), the term securities entity—

(I) includes any entity engaged in—

(aa) the issue, flotation, underwriting, public sale, or distribution of stocks, bonds, debentures, notes, or other securities;

(bb) market making;

(cc) activities of a broker or dealer, as those terms are defined in section 3(a) of the Securities Exchange Act of 1934;

(dd) activities of a futures commission merchant;

(ee) activities of an investment adviser or investment company, as those terms are defined in the Investment Advisers Act of 1940 and the Investment Company Act of 1940, respectively; or

(ff) hedge fund or private equity investments in the securities of either privately or publicly held companies; and

(II) does not include a bank that, pursuant to its authorized trust and fiduciary activities, purchases and sells investments for the account of its customers or provides financial or investment advice to its customers.

(iii) Swaps entity

The term swaps entity means any swap dealer, security-based swap dealer, major swap participant, or major security-based swap participant, that is registered under—

(I) the Commodity Exchange Act ( 7 U.S.C. 1 et seq. ); or

(II) the Securities Exchange Act of 1934 ( 15 U.S.C. 78a et seq. ).

(iv) Insured depository institution

The term insured depository institution—

(I) has the same meaning as in section 3(c)(2); and

(II) does not include a savings association controlled by a savings and loan holding company, as described in section 10(c)(9)(C) of the Home Owners’ Loan Act (12 U.S.C. 1467a(c)(9)(C)).

(b) Limitation On Banking Activities

Section 21 of the Banking Act of 1933 (12 U.S.C. 378) is amended by adding at the end the following:

(c) Business Of Receiving Deposits

For purposes of this section, the term business of receiving deposits includes the establishment and maintenance of any transaction account (as defined in section 19(b)(1)(C) of the Federal Reserve Act).

.(c) Permitted Activities Of National Banks

Section 24 (Seventh) of the Revised Statutes of the United States (12 U.S.C. 24 (Seventh)) is amended to read as follows:

Seventh. (A) To exercise by its board of directors or duly authorized officers or agents, subject to law, all such powers as are necessary to carry on the business of banking.

(B) As used in this paragraph, the term business of banking shall be limited to the following core banking services:

(i) Receiving deposits

A national banking association may engage in the business of receiving deposits.

(ii) Extensions of credit

A national banking association may—

(I) extend credit to individuals, businesses, not for profit organizations, and other entities;

(II) discount and negotiate promissory notes, drafts, bills of exchange, and other evidences of debt; and

(III) loan money on personal security.

(iii) Payment systems

A national banking association may participate in payment systems, defined as instruments, banking procedures, and interbank funds transfer systems that ensure the circulation of money.

(iv) Coin and bullion

A national banking association may buy, sell, and exchange coin and bullion.

(v) Investments in securities

(I) In general

A national banking association may invest in investment securities, defined as marketable obligations evidencing indebtedness of any person, copartnership, association, or corporation in the form of bonds, notes, or debentures (commonly known as “investment securities”), obligations of the Federal Government, or any State or subdivision thereof, under such further definition of the term investment securities as the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Board of Governors of the Federal Reserve System may jointly prescribe, by regulation.

(II) Limitations

The business of dealing in securities and stock by the association shall be limited to purchasing and selling such securities and stock without recourse, solely upon the order, and for the account of, customers, and in no case for its own account, and the association shall not underwrite any issue of securities or stock. The association may purchase for its own account investment securities under such limitations and restrictions as the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Board of Governors of the Federal Reserve System may jointly prescribe, by regulation. In no event shall the total amount of the investment securities of any one obligor or maker, held by the association for its own account, exceed at any time 10 percent of its capital stock actually paid in and unimpaired and 10 percent of its unimpaired surplus fund, except that such limitation shall not require any association to dispose of any securities lawfully held by it on August 23, 1935.

(C) Prohibition against transactions involving structured or synthetic products

A national banking association shall not invest in a structured or synthetic product, a financial instrument in which a return is calculated based on the value of, or by reference to the performance of, a security, commodity, swap, other asset, or an entity, or any index or basket composed of securities, commodities, swaps, other assets, or entities, other than customarily determined interest rates, or otherwise engage in the business of receiving deposits or extending credit for transactions involving structured or synthetic products..

(d) Permitted Activities Of Federal Savings Associations

(1) In general

Section 5(c)(1) of the Home Owners’ Loan Act (12 U.S.C. 1464(c)(1)) is amended—

(A) by striking subparagraph (Q); and

(B) by redesignating subparagraphs (R) through (U) as subparagraphs (Q) through (T), respectively.

(2) Conforming amendment

Section 10(c)(9)(A) of the Home Owners’ Loan Act (12 U.S.C. 1467a(c)(9)(A)) is amended by striking “permitted—” and all that follows through clause (ii) and inserting “permitted under paragraph (1)(C) or (2).”.

(e) Closely Related Activities

Section 4(c) of the Bank Holding Company Act of 1956 ( 12 U.S.C. 1843(c) ) is amended—

(1) in paragraph (8), by striking “had been determined” and all that follows through the end and inserting the following: “are so closely related to banking so as to be a proper incident thereto, as provided under this paragraph or any rule or regulation issued by the Board under this paragraph, provided that the following shall not be considered closely related for purposes of this paragraph:

(A) Serving as an investment advisor (as defined in section 2(a)(20) of the Investment Company Act of 1940 ( 15 U.S.C. 80a–2(a)(20) )) to an investment company registered under that Act, including sponsoring, organizing, and managing a closed-end investment company.

(B) Agency transactional services for customer investments, except that this subparagraph may not be construed as prohibiting purchases and sales of investments for the account of customers conducted by a bank (or subsidiary thereof) pursuant to the bank’s trust and fiduciary powers.

(C) Investment transactions as principal, except for activities specifically allowed by paragraph (14).

(D) Management consulting and counseling activities.;

(2) in paragraph (13), by striking “or” at the end;

(3) by redesignating paragraph (14) as paragraph (15); and

(4) by inserting after paragraph (13) the following:

(14) purchasing, as an end user, any swap, to the extent that—

(A) the purchase of any such swap occurs contemporaneously with the underlying hedged item or hedged transaction;

(B) there is formal documentation identifying the hedging relationship with particularity at the inception of the hedge; and

(C) the swap is being used to hedge against exposure to—

(i) changes in the value of an individual recognized asset or liability or an identified portion thereof that is attributable to a particular risk;

(ii) changes in interest rates; or

(iii) changes in the value of currency; or.

(f) Prohibited Activities

Section 4(a) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(a)) is amended—

(1) in paragraph (1), by striking “or” at the end;

(2) in paragraph (2), by striking the period at the end and inserting “; or”; and

(3) by inserting before the undesignated matter following paragraph (2), the following:

(3) with the exception of the activities permitted under subsection (c), engage in the business of a “securities entity” or a “swaps entity”, as those terms are defined in section 18(s)(6)(D) of the Federal Deposit Insurance Act ( 12 U.S.C. 1828(s)(6)(D) ), including, without limitation, dealing or making markets in securities, repurchase agreements, exchange traded and over-the-counter swaps, as defined by the Commodity Futures Trading Commission and the Securities and Exchange Commission, or structured or synthetic products, as defined in section 24 (Seventh) of the Revised Statutes of the United States (12 U.S.C. 24 (Seventh)), or any other over-the-counter securities, swaps, contracts, or any other agreement that derives its value from, or takes on the form of, such securities, derivatives, or contracts;

(4) engage in proprietary trading, as provided by section 13, or any rule or regulation under that section;

(5) own, sponsor, or invest in a hedge fund, or private equity fund, or any other fund, as provided by section 13, or any rule or regulation under that section, or any other fund which exhibits the characteristics of a fund that takes on proprietary trading activities or positions;

(6) hold ineligible securities or derivatives;

(7) engage in market-making; or

(8) engage in prime brokerage activities..

(g) Anti-Evasion

(1) In general

Any attempt to structure any contract, investment, instrument, or product in such a manner that the purpose or effect of such contract, investment, instrument, or product is to evade or attempt to evade the prohibitions described in section 18(s)(6) of the Federal Deposit Insurance Actsection 21(c) of the Banking Act of 1933paragraph (Seventh) of section 24 of the Revised Statutes of the United Statessection 5(c)(1) of the Home Owners’ Loan Act, or section 4(a) of the Bank Holding Company Act of 1956, as added or amended by this section, shall be considered a violation of the Federal Deposit Insurance Act, the Banking Act of 1933section 24 of the Revised Statutes of the United States, the Home Owners’ Loan Act, and the Bank Holding Company Act of 1956, respectively.

(2) Termination

(A) In general

Notwithstanding any other provision of law, if a Federal agency has reasonable cause to believe that an insured depository institution, securities entity, swaps entity, insurance company, bank holding company, or other entity over which that agency has regulatory authority has made an investment or engaged in an activity in a manner that functions as an evasion of the prohibitions described in paragraph (1) (including through an abuse of any permitted activity) or otherwise violates such prohibitions, the agency shall—

(i) order, after due notice and opportunity for hearing, the entity to terminate the activity and, as relevant, dispose of the investment;

(ii) order, after the procedures described in clause (i), the entity to pay a penalty equal to 10 percent of the entity’s net profits, averaged over the previous 3 years, into the United States Treasury; and

(iii) initiate proceedings described in 12 U.S.C. 1818(e) for individuals involved in evading the prohibitions described in paragraph (1).

(B) Construction

Nothing in this paragraph shall be construed to limit the inherent authority of any Federal agency or State regulatory authority to further restrict any investments or activities under otherwise applicable provisions of law.

(3) Reporting requirement

Each year, each Federal agency having regulatory authority over any entity described in paragraph (2)(A) shall issue a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives, and shall make such report available to the public. The report shall identify the number and character of any activities that took place in the preceding year that function as an evasion of the prohibitions described in paragraph (1), the names of the particular entities engaged in those activities, and the actions of the agency taken under paragraph (2).

(h) Attestation

Section 4 of the Bank Holding Company Act of 1956 ( 12 U.S.C. 1843 ), as amended by section 3(a)(1) of this Act, is amended by adding at the end the following:

(k) Attestation

Executives of any bank holding company or its affiliate shall attest in writing, under penalty of perjury, that the bank holding company or affiliate is not engaged in any activity that is prohibited under subsection (a), except to the extent that such activity is permitted under subsection (c).

[Directs that permitted or prohibited activities be interpreted within the relevant FDIC or Bank Holding Company Act requirement.]

4. REPEAL OF GRAMM-LEACH-BLILEY ACT PROVISIONS

(a) Termination Of Financial Holding Company Designation

(1) In general

Section 4 of the Bank Holding Company Act of 1956 (12 U.S.C. 1843) is amended by striking subsections (k)(l)(m)(n), and (o).

(2) Transition

(A) Orderly termination of existing affiliation

In the case of a bank holding company which, pursuant to the amendments made by paragraph (1), is no longer authorized to control or be affiliated with any entity that was permissible for a financial holding company on the day before the date of enactment of this Act, any affiliation, ownership or control, or activity by the bank holding company which is not permitted for a bank holding company shall be terminated as soon as is practicable, and in no event later than the end of the 5-year period beginning on the date of enactment of this Act.

(B) Early termination

The Board of Governors of the Federal Reserve System (in this section referred to as the “Board”), after opportunity for hearing, at any time, may terminate an affiliation prohibited by subparagraph (A) before the end of the 5-year period described in subparagraph (A), if the Board determines that such action—

(i) is necessary to prevent undue concentration of resources, decreased or unfair competition, conflicts of interest, or unsound banking practices; and

(ii) is in the public interest.

(C) Extension

Subject to a determination under subparagraph (B), the Board may extend the 5-year period described in subparagraph (A), as to any particular bank holding company, for not more than an additional 6 months at a time, if—

(i) the Board certifies that such extension would promote the public interest and would not pose a significant risk to the stability of the banking system or financial markets of the United States; and

[Extensions beyond 5 years are possible should that be deemed in the public interest.  TARP and other bailout programs, one may recall, were imposed precisely because Congress did not want to “risk the stability of the banking system or financial markets”.] 

(ii) such extension, in the aggregate, does not exceed 1 year for any one bank holding company.

(D) Requirements for entities receiving an extension

Upon receipt of an extension under subparagraph (C), the bank holding company shall notify its shareholders and the general public that it has failed to comply with the requirements of subparagraph (A).

(3) Technical and conforming amendments

(A) Bank holding company act of 1956

The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is amended—

(i) in section 2 ( 12 U.S.C. 1841 )—

(I) by striking subsection (p); and

(II) by redesignating subsection (q) as subsection (p);

(ii) in section 5(c) ( 12 U.S.C. 1844(c) ), by striking paragraphs (3)(4), and (5); and

(iii) in section 5 ( 12 U.S.C. 1844 ), by striking subsection (g).

(4) FDIA

The Federal Deposit Insurance Act ( 12 U.S.C. 1811 et seq. ) is amended—

(A) by striking sections 45 and 46 ( 12 U.S.C. 1831v , 1831w); and

(B) by redesignating sections 47 through 50 as sections 45 through 48, respectively.

(5) Gramm-leach-bliley

Subtitle B of title I of the Gramm-Leach-Bliley Act is amended by striking section 115 ( 12 U.S.C. 1820a ).

(b) Financial Subsidiaries Of National Banks Disallowed

(1) In general

Section 5136A of the Revised Statutes of the United States ( 12 U.S.C. 24a ) is repealed.

(2) Transition

(A) Orderly termination of existing affiliation

In the case of a national bank which, pursuant to the amendment made by paragraph (1), is no longer authorized to control or be affiliated with a financial subsidiary as of the date of enactment of this Act, such affiliation, ownership or control, or activity shall be terminated as soon as is practicable, and in no event later than the end of the 5-year period beginning on the date of enactment of this Act.

(B) Early termination

The Comptroller of the Currency (in this section referred to as the “Comptroller”), after opportunity for hearing, at any time, may terminate an affiliation prohibited by subparagraph (A) before the end of the 5-year period described in subparagraph (A), if the Comptroller determines, having due regard for the purposes of this Act, that—

(i) such action is necessary to prevent undue concentration of resources, decreased or unfair competition, conflicts of interest, or unsound banking practices; and

(ii) is in the public interest.

(C) Extension

Subject to a determination under subparagraph (B), the Comptroller may extend the 5-year period described in subparagraph (A) as to any particular national bank for not more than an additional 6 months, if—

(i) the Comptroller certifies that such extension would promote the public interest and would not pose a significant risk to the stability of the banking system or financial markets of the United States; and

(ii) such extension, in the aggregate, does not exceed 1 year for any single national bank.

(D) Requirements for entities receiving an extension

Upon receipt of an extension under subparagraph (C), the national bank shall notify its shareholders and the general public that it has failed to comply with the requirements described in subparagraph (A).

(3) Technical and conforming amendment

The 20th undesignated paragraph of section 9 of the Federal Reserve Act (12 U.S.C. 335) is amended by striking the last sentence.

(4) Clerical amendment

The table of sections for chapter one of title LXII of the Revised Statutes of the United States is amended by striking the item relating to section 5136A.

(c) Repeal Of Provision Relating To Foreign Banks Filing As Financial Holding Companies

Section 8(c) of the International Banking Act of 1978 ( 12 U.S.C. 3106(c) ) is amended by striking paragraph (3).

5. REPEAL OF BANKRUPTCY PROVISIONS

Title 11, United States Code, is amended by striking sections 555559560561, and 562.

https://www.govtrack.us/congress/bills/113/s1282/text

I really do not see any way that this proposed bill would end Too Big To Fail, or would slow down or stop the Fed Bank Cartel.  If anything, it ends FDIC.

More specifically, it would after 5 years and any extensions, eliminate FDIC protection for depositors and/or investors in any financial entity that conducts insurance, securities, or swaps business excepting for such activities that are provided on account of its (the institution’s) depositors or its “customers … pursuant to its trust and fiduciary obligations”.  The Comptroller of the Currency would have the authority (but no obligation) to terminate FDIC protection for entities engaged in prohibited activities earlier than 5 years (plus extensions) from enactment of the bill if the Comptroller determined that was in the public interest  – making that another meaningless provision.

Naturally, FDIC could be eliminated entirely or, as has already happened (see: http://www.lifeinthemix.info/2013/04/profile-basel-iii/) could simply redefine depositor to mean investor, making FDIC protection worthless to the individual consumer anyway.  With consumers not protected by FDIC, there would be little of a practical nature to distinguish the risk to the consumer from banks that exclude such activities as securities, swaps, or insurance businesses, from banks that don’t – except that the former would be more likely to screw you for profit for their own account than do the banks that don’t trade for their own account.

Most importantly, this bill does NOT reinstate Glass-Steagall, not by a long shot.  It does not break up any banks, except and unless that bank wants FDIC protection for its depositors, and then only 5 years and possibly a bunch of extensions from now.  It does not in any manner whatsoever stop the Fed Bank Cartel, ever, from their endless self-serving, or stop them, ever, from controlling and dominating global markets as their own playground, or end the practice of banks using the unlimited free monies and free financial facilities created by the Fed Cartel and its Member/Owner Banks for their own accounts and their own benefit.

Frankly, it actually and ironically increases pressure from both the political and the financial sectors to remove or reduce FDIC protections- to take that expensive item away right along with all the OTHER “entitlements” the consuming public has grown accustomed to.  And simultaneously increases the pressure on the Fed Cartel banks to stop handling depository business at all.

Despite its audacious advance billing, this proposed legislation will matter not a whit unless each and all of the following things occur over the next 5 years:  a) FDIC remains a viable consumer/depositor protection;  b) depositors and consumers continue therefore to demand FDIC protection; c) the Fed Cartel decides it even needs actual depositors (why would they?).  Seems a case could be made that this is actually a remarkably anti-consumer bill.  At the very least, this is a totally misnamed bill being deceptively touted by Elizabeth Warren, et.al., and pushed along by our published-as-provided media with dishonest claims that it will accomplish great things, things that it never actually addresses, things such as Too Big To Fail and the great Bankster Fraud we are currently living through.  I have read not one single article that does more than repeat Warren’s claims about the bill, not one article that quotes, much less analyzes, any portion of the bill, by which I can only surmise that none of these writers has actually looked at the bill in question.

But here’s what you’ll be reading elsewhere:

Mother Jones article Nov. 12, 2013:

[…] Instead of relying on regulators to write strict rules, Warren pushed the 21st Century Glass-Steagall Act, a bill she’s introduced alongside Sen. John McCain (R-Ariz.) and other senators that would force commercial financial institutions to wall off standard bank deposits from the riskier activities of investment banking, such as the swaps that sunk the economy in ’08.

“The new Glass-Steagall Act would attack both ‘too big’ and ‘to fail,'” Warren said Tuesday. “It would reduce failures of the big banks by making banking boring, protecting deposits, and providing stability to the system even in bad times. And it would reduce ‘too big’ by dismantling the behemoths, so that big banks would still be big—but not too big to fail or, for that matter, too big to manage, too big to regulate, too big for trial, or too big for jail.”  […]

http://www.motherjones.com/politics/2013/11/elizabeth-warren-dodd-frank-too-big-fail-speech-regulators

We note, however, that simply “walling off” standard bank deposits from riskier activities of investment banking, while still allowing those riskier activities to be conducted within those depository institutions (and allowing those activities to be conducted with money derived from the Federal Reserve) is quite entirely different from the original Glass-Steagall Act which fully forbade such investment and speculative activities from depository banking institutions.  This covered all institutions, not just those enjoying Federal Reserve access (Membership, Ownership, and Discount Window privileges) but all those benefiting from Fractional Reserve lending powers, which was collectively the entire set of Federal Reserve, FDIC, and OTS regulated entities including Banks, Thrifts, S & L’s, and Credit Unions.

The best we can say is that “walling off” the riskiest bank activities from FDIC “protection” accomplishes some small tangential goal, and closes a loophole that had not yet ever been used.  It may be true, probably no doubt is, that the banks are now scheming to use FDIC to reimburse themselves for future speculative trading losses, but let’s more accurately name the bill “FDIC Restrictions in the 21st Century”, not “The 21st Century Glass-Steagall Act”.

All the articles on the subject seem written this way – as though this bill were going to break up the banks and restore Glass-Steagall.  Oh yeah, that’s even its name.  Well, it doesn’t.

In fact, Elizabeth Warren and John McCain, like the rest of the status quo parties, Republican and Democrat alike, actually intend to allow the banksters to continue doing whatever risky shit they want to do with the public money.  With as much of that money as they want.  That money was created, of course, in the name of and as a debt obligation of the United States, but in favor of those very private, very self-interested Federal Reserve Cartel of Banks, and at the Fed’s own whim.  They are creating so much money for themselves that those banks will continue to dominate and subvert every market, commodity, and exchange they have any interest in forever.

Elizabeth Warren and John McCain and the rest just want to make a show about not letting the banksters go so openly to the government, to the public till, to us, well, to FDIC, anyway, for reimbursement of their losses, if they ever were to have losses.  AS IF bankster losses were the real problem with this arrangement.

But still.

It’s difficult to bash Warren because, well, how could you not like her?  I used to think she would make a swell President; however, once she began the campaign for her Senate race in 2011, I wondered how well anyone really knew her and over the past year or so, have begun to think that some of her positions are much closer to the Obama/Clinton/ neoliberal views than most people realize.  Or, perhaps, as with Obama, we just don’t want to see what is in front of our faces.

So, prepare yourself, and let’s go back to NakedCapitalism.com in October, 2011:

Elizabeth Warren’s Jobs Plan: War with Iran

As much as your humble blogger still regards Elizabeth Warren as preferable to Scott Brown in the Massachusetts Senate race, the evidence from her campaign is that she is no progressive, unless you define “progressive” to mean “centrist/Hamilton Project Democrat willing to throw a few extra bones to the average Joe.”

We’ve warned repeatedly that Warren not being all that left leaning was a real possibility.[…]

Warren: “Our number one responsibility is to protect Americans from terrorism, that’s our job, so being tough on terrorism is enormously important,” said Warren yesterday at a campaign stop in Gloucester.

“We should take nothing off the table, but the facts are still emerging,” the Senate candidate said when asked if she would support military action against Iran.

Huh? Protecting Americans against terrorism is number one? That means it ranks ahead of the rule of law, among other things. And this from a law professor. Glad we got that clear. […]

http://www.nakedcapitalism.com/2011/10/elizabeth-warrens-job-plan-war-with-iran.html

Apparently, Warren used to be a Republican:

“I was a Republican because I thought that those were the people who best supported markets. I think that is not true anymore,” Warren says. “I was a Republican at a time when I felt like there was a problem that the markets were under a lot more strain. It worried me whether or not the government played too activist a role.”  [Teri’s note: In this interview, by the way, she also takes credit for “creating the intellectual foundation of Occupy Wall Street”.]

http://www.thedailybeast.com/articles/2011/10/24/elizabeth-warren-i-created-occupy-wall-street.html

“Best supported markets”?  Supported, as opposed to understanding?  As opposed to regulating?  It’s an interesting choice of words.

And she voted “aye” on Jack Lew’s nomination as Treasury Secretary.  Freaking Jack Lew, man.  Never bothered to explain that, although since Bernie Sanders was the only adamant “nay”, she could have safely joined him in protest without changing the already guaranteed outcome.  But she didn’t.  There is an interesting article about her vote on that, along with a few other tidbits, here:

http://legalinsurrection.com/2013/03/progressive-columnist-rips-elizabeth-warren-hyprocrisy-on-jack-lew/

During her Senate race, Elizabeth Warren’s positions on the issues, via votesmart, were as follows:

“Elizabeth Warren refused to tell citizens where she stands on any of the issues addressed in the 2012 Political Courage Test, despite repeated requests from Vote Smart, national media, and prominent political leaders.”

http://votesmart.org/candidate/political-courage-test/141272/elizabeth-warren/#.UoiUtN2RMpc

On the votesmart chart, Warren’s positions on every single item had to be inferred (i.e., a guess based on what they thought she was saying in various speeches, articles, etc.).  Well, my stars!

She has her website up and running, though, and some of her stated positions therein are interesting, to say the least.  I gather no-one reads her website, instead relying on the media’s soundbites and opinion pieces.

Elizabeth Warren on Israel:

Since its founding more than 60 years ago, Israel and the United States have been steadfast, trusted, and reliable allies. I unequivocally support the right of a Jewish, democratic state of Israel to exist, safe and secure. I believe that it is a moral imperative to support and defend its existence.

[…] As a United States Senator, I will work to ensure Israel’s security and success.  I believe Israel must maintain a qualitative military edge and defensible borders. The United States must continue to ensure that Israel can defend itself from terrorist organizations and hostile states, including Iran, Hamas, Hezbollah, and others. I also believe firmly that a two-state solution is in the interest of Israel and the United States.   [Teri’s note: I gather the interests of Palestine have no bearing here.]  Lasting peace, however, requires negotiations between the parties themselves, and although the United States can and should aid in this process, we cannot dictate the terms. Unilateral actions, such as the Palestinians’ membership efforts before the United Nations, are unhelpful, and I would support vetoing a membership application.

Elizabeth Warren on Iran:

Iran is a significant threat to the United States and our allies.  Iran is pursuing nuclear weapons, it is an active state sponsor of terrorism, and its leaders have consistently challenged Israel’s right to exist. Iran’s pursuit of nuclear weapons is unacceptable because a nuclear Iran would be a threat to the United States, our allies, the region, and the world.  [Teri’s note: That none of these statements are factual is no deterrent to making them, apparently.]  The United States must take the necessary steps to prevent Iran from acquiring a nuclear weapon. I support strong sanctions against Iran and believe that the United States must also continue to take a leadership role in pushing other countries to implement strong sanctions as well.  Iran must not have an escape hatch.  [Teri’s note: this last sentence is so blood-thirsty that I am completely aghast at the thought that Elizabeth Warren could have even put that in writing.]

Elizabeth Warren on Homeland Security:

It has now been more than one year since the death of Osama bin Laden [Teri’s note: bought that story whole-hog, did you?], and the President’s assertive operations have eliminated many of Al Qaeda’s senior leadership and weakened its affiliates. But the threat of terrorism remains, and we must remain vigilant. We must continue our political, military, economic, and diplomatic efforts against Al Qaeda and its affiliates, and we need to continue to support the efforts of our intelligence, law enforcement, homeland security, and military professionals.

Elizabeth Warren on U.S. Economic Power and the Military:

Our economic power at home is linked to our strength around the world. A strong economy at home enables us to have the best-trained and most advanced military in the world – and the standing in the world such that we don’t always need to use it.  [Teri’s note: That’s the reason for a strong economy?  To support our military adventures?  Really?]  A strong economy at home enables us to export goods to foreign customers. A strong economy at home gives us influence over events occurring all around the world. And a strong economy at home enables us to spread the values of democracy and human rights. We are one of the most powerful countries in the history of the world precisely because we are one of the strongest economies in the history of the world.

As a Senator, I will never forget the link between our economic power and our global power, and I will fight to make sure we build a strong economy, so we can remain a powerful force for good around the world.

http://elizabethwarren.com/issues/foreign-policy

All this hawkish, AIPAC, Israel-first, projecting our power abroad, PNAC crap gets tedious.  It is anti-human and odious.  And if it sounds familiar, that’s because it pretty much sums up the belief system of all our elected officials now, no matter what the results of such belligerence may be.

Et tu, Elizabeth Warren?

Finally, just two days ago, I received an email from Organic Consumers Association that speaks volumes of Elizabeth Warren’s ongoing duplicity on GMO and GMO labeling…

Thanks, Sen. Warren, but . . .

It took 42,000 petition signatures and a visit to her office. But on November 4, noted consumer advocate Sen. Elizabeth Warren (D-Mass.) finally took a position in favor  of mandatory labels on food made with genetically modified organisms (GMOs) when she signed on as a co-sponsor to the Boxer-DeFazio bill.

We’re grateful that Sen. Warren has come around to our side. The only problem is, she’s still also siding with Monsanto  and the Grocery Manufacturers Association (GMA)  by asking the U.S. Food & Drug Administration (FDA) to finalize its guidance for voluntary labeling of GMOs.

How can it be that Sen. Warren is supporting both consumers and the biotech and junk food industries? At the same time?

If the FDA finalizes its 2001 guidance on voluntary labeling, it could mean the end for any state or federal mandatory GMO labeling law. And it could make it impossible for manufacturers of non-GMO products to legitimately claim their products are non-GMO.

– Organic Consumers Assoc.

If you are interested in GMO labeling, also see this for further edification on Warren’s statements, the FDA guidance, and the status of labeling:

“Senators Angle for Monsanto-Friendly FDA Voluntary GMO Labeling ‘Guidance’ ”  http://www.organicconsumers.org/articles/article_28376.cfm

Oh, Elizabeth, we hardly know ye.

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6 Comments

Posted by on November 22, 2013 in Congress, Wall St and banks

 

Wikileaks releases a chapter of the TPP trade agreement.

Today, Wikileaks released the Intellectual Property chapter of the secret TPP [TransPacific Partnership] trade agreement.  I am going to give excerpts from two articles on this subject, and although they may be lengthy, I think they are important reading.  I do not believe that there is any such thing as being “too alarmist” over the TPP and its sister trade agreement in the Atlantic areas, the TTIP.

Breaking: Pivotal Trans-Pacific Partnership Section Revealed

Wednesday, 13 November 2013 09:39

By Staff, PopularResistance.org| Press Release

The TPP has been shrouded in secrecy from the beginning because the Obama administration knows that the more people know about it, the more they will oppose the agreement. The release of the full Intellectual Property chapter today by Wiikileaks confims what had been suspected, the Obama administration has been an advocate for transnational corporate interests in the negotiations even though they run counter to the needs and desires of the public.

This is not surprising since we already knew that 600 corporate advisers were working with the US Trade Representative to draft the TPP.  This means that for nearly four years some of the top corporate lawyers have been inserting phrases, paragraphs and whole sections so the agreement suits the needs of corporate power, while undermining the interests of people and the planet.

Now from these documents we see that the US is isolated in its aggressive advocacy for transnational interests and that there are scores of areas still unresolved between the US and Pacific nations. The conclusion: the TPP cannot be saved.  It has been destroyed by secret corporate advocacy.  It needs to be rejected.  Trade needs to be negotiated with a new approach — transparency, participation of civil society throughout the process, full congressional review and participation, and a framework that starts with fair trade that puts people and the planet before profits.

Congress needs to reject Fast Track Trade Promotion Authority as these documents show the Obama administration has been misleading the people and the Congress while trying to bully other nations.  This flawed agreement and the secrecy essential to its becoming law need to be rejected.

From Wikileaks:

Secret Trans-Pacific Partnership Agreement

Today, 13 November 2013, WikiLeaks released the secret negotiated draft text for the entire TPP (Trans-Pacific Partnership) Intellectual Property Rights Chapter. The TPP is the largest-ever economic treaty, encompassing nations representing more than 40 per cent of the world’s GDP. The WikiLeaks release of the text comes ahead of the decisive TPP Chief Negotiators summit in Salt Lake City, Utah, on 19-24 November 2013. The chapter published by WikiLeaks is perhaps the most controversial chapter of the TPP due to its wide-ranging effects on medicines, publishers, internet services, civil liberties and biological patents. Significantly, the released text includes the negotiation positions and disagreements between all 12 prospective member states.

The TPP is the forerunner to the equally secret US-EU pact TTIP (Transatlantic Trade and Investment Partnership), for which President Obama initiated US-EU negotiations in January 2013. Together, the TPP and TTIP will cover more than 60 per cent of global GDP.

From Public Citizen:

Leaked Documents Reveal Obama Administration Push for Internet Freedom Limits, Terms That Raise Drug Prices in Closed-Door Trade Talks

U.S. Demands in Trans-Pacific Partnership Agreement Text, Published Today by WikiLeaks, Contradict Obama Policy and Public Opinion at Home and Abroad

WASHINGTON, D.C. – Secret documents published today by WikiLeaks and analyzed by Public Citizen reveal that the Obama administration is demanding terms that would limit Internet freedom and access to lifesaving medicines throughout the Asia-Pacific region and bind Americans to the same bad rules, belying the administration’s stated commitments to reduce health care costs and advance free expression online, Public Citizen said today.

WikiLeaks published the complete draft of the Intellectual Property chapter for the Trans-Pacific Partnership (TPP), a proposed international commercial pact between the United States and 11 Asian and Latin American countries.

http://truth-out.org/news/item/20006-breaking-pivotal-corporate-dominated-trans-parcific-partnership-section-revealed

 

The Wikileaks press release is here:  https://wikileaks.org/tpp/pressrelease.html

Within this press release, Wikileaks gives a link from which you can download the complete text of the Intellectual Property chapter of the TPP as a pdf.

The NY Times editorial board has endorsed the TPP; Maira Sutton of the Electronic Frontier Foundation writes that the Times endorsement “[…] raises two distressing possibilities: either in an act of extraordinary subservience, the Times has endorsed an agreement that neither the public nor its editors have the ability to read. Or, in an act of extraordinary cowardice, it has obtained a copy of the secret text and hasn’t yet fulfilled its duty to the public interest to publish it. […]”

https://www.eff.org/deeplinks/2013/11/how-can-nytimes-endorse-agreement-public-cant-read

The excerpt below is from Yves Smith at Naked Capitalism.   Yves writes and summarizes the subject so well that I couldn’t stand to cut much.  She does her usual great job here:

[…]  Word has apparently gotten out even to Congressmen who can normally be lulled to sleep with the invocation of the magic phrase “free trade” that the pending Trans Pacific Partnership is toxic. This proposed deal among 13 Pacific Rim countries (essentially, an “everybody but China” pact), is only peripherally about trade, since trade is already substantially liberalized. Its main aim is to strengthen the rights of intellectual property holders and investors, undermining US sovereignity, allowing drug companies to raise drug prices, interfering with basic operation of the Internet, and gutting labor, banking, and environmental regulations. […]

“Fast track” authority limits Congress’s role in trade negotiations. The Administration presents a finished deal, and individual members have only an up or down vote. At that point, because the pending agreements have been misleadingly presented as “pro trade,” dissenters will be depicted as anti-growth Luddites. […]

Let’s give more detail on how heinous this deal and its ugly sister, the Transatlantic Trade and Investment Partnership [TTIP], aka the Trans Atlantic Free Trade Agreement, are. They would extend the authority of secret arbitration panels to hear cases against governments and issue awards. Mind you, the premise of these panels is that some of the signatory nations have banana republic legal systems that might authorize the expropriation of assets, like factories, so foreign investors need recourse to safe venues to obtain compensation. This is a ludicrous proposition to most of the signatories, not only to signatories of the Atlantic agreement (all advanced economies with mature legal systems) as well as potential signatories like Singapore, Japan, Canada, and Australia (and while America’s judicial system leaves a lot to be desired, it can hardly be accused of being unfriendly to commercial interests).

A post in Triple Crisis by Martin Khor gives a good overview:

In the public debate surrounding the Trans-Pacific Partnership Agreement (TPPA), an issue that seems to stand out is the investor-state dispute settlement (ISDS) system. It would enable foreign investors of TPPA [e.g., the TPP] countries to directly sue the host government in an international tribunal.

In most US free trade agreements (FTAs) with investor-state dispute provisions, the tribunal most mentioned is the International Centre for Settlement of Investment Disputes (ICSID), an arbitration court hosted by the World Bank in Washington.

ISDS would be a powerful system for enforcing the rules of the TPPA, which is currently being negotiated by the US and 11 other Pacific Rim countries. Any foreign investor from TPPA countries can take up a case claiming that the government has not met its relevant TPPA obligations.

If the claim succeeds, the tribunal could award the investor financial compensation for the claimed losses. If the payment is not made, the award can potentially be enforced through the seizure of assets of the government that has been sued, or through tariffs raised on the country’s exports.

ISDS is related to relevant parts of the TPPA’s investment chapter. One of the provisions is a broad definition of “investment” which includes credit, contracts, intellectual property rights (IPRs), and expectations of future gains and profits. Investors can make claims on losses to these assets.

Under the “national treatment” provision, a foreign investor can claim to be discriminated against if the local is given preference or other advantage.

Under the clause on fair and equitable treatment, which is contained in many existing trade and investment treaties, investors have sued on the ground of non-renewal or change in the terms of a licence or contract and changes in policies or regulations that the investor claims will reduce its future profits.

Finally, investors can sue on the ground of “indirect expropriation”. Tribunals have ruled in favour of investors that claimed losses due to government policies or regulations, such as tighter health and environmental regulations.

Even though no one has seen the exact language of the text, since it is being kept under wraps, both deals are believed to strengthen and extend investor rights, which means give them easier access to the courts. Consider this description from a July presentation by Public Citizen:

What is different with TAFTA [pending Trans Atlantic Free Trade Agreement] (and the TPP) is the extent of “behind the border” agenda:

• Typical boilerplate: “Each Member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements.” …

• These rules are enforced by binding dispute resolution via foreign tribunals with ruling enforced by trade indefinite sanctions; No due process; No outside appeal. Countries must gut laws ruled against. Trade sanctions imposed…U.S. taxpayers must compensate foreign corporations.

• Permanence – no changes w/o consensus of all signatory countries. So, no room for progress, responses to emerging problems

• Starkly different from past of international trade between countries. This is diplomatic legislating of behind the border policies – but with trade negotiators not legislators or those who will live with results making the decisions.

3 private sector attorneys, unaccountable to any electorate, many of whom rotate between being “judges” & bringing cases for corps. against govts…Creates inherent conflicts of interest….

• Tribunals operate behind closed doors – lack basic due process

• Absolute tribunal discretion to set damages, compound interest, allocate costs

No limit to amount of money tribunals can order govts to pay corps/investors

• Compound interest starting date if violation new norm ( compound interest ordered by tribunal doubles Occidental v. Ecuador $1.7B award to $3B plus

• Rulings not bound by precedent. No outside appeal. Annulment for limited errors.

And that’s alarming in light of some of the cases already brought before these panels in existing trade agreements like NAFTA. For instance:

Eli Lilly is suing the Canadian government for not having the same extremely pro-drug-company patent rules. It is seeking $500 million in damages for two drugs that Canada approve to be sold as generics. If Eli Lilly prevails, other drug companies are sure to follow suit.

Vattenfal, a Swedish company, is a serial trade pact litigant against Germany. In 2011, Der Spiegel reported on how it was suing for expected €1 billion plus losses due to Germany’s program to phase out nuclear power…

Phillip Morris threatened suit against Australia for its plain cigarette packing rules and is suing Uraguay for anti-smoking regulations

Now consider what this means. These companies are not suing for actual expenses or loss of assets; they are suing for loss of potential future profits. They are basically acting as if their profit in a particular market was guaranteed absent government action. […]

So this is the time when it is REALLY important to call or e-mail your Representative and let him or her know how terrible this deal is and how firmly opposed to it you are. Use the link to the Public Citizen overview (http://www.citizenstrade.org/ctc/wp-content/uploads/2013/07/GlobalTradeWatch_TAFTAslides_070913.pdf) or cite other posts or articles you think they should see. […]

Read more at http://www.nakedcapitalism.com/2013/11/house-pushing-back-on-trade-deal-more-detail-on-how-secretive-arbitration-panels-undermine-laws-and-regulations.html#xlGHK5yg6O31B8Xo.99

“These companies are not suing for actual expenses or loss of assets; they are suing for loss of potential future profits. They are basically acting as if their profit in a particular market was guaranteed absent government action.”

“If the claim succeeds, the tribunal could award the investor financial compensation for the claimed losses. If the payment is not made, the award can potentially be enforced through the seizure of assets of the government that has been sued, or through tariffs raised on the country’s exports.”

Thus is the Great Taking revealed in all its plastic elastic glory.  (As is Obamacare and the continuing bank bailouts and all the austerity crap, but those are subjects for another time).  The loss of any potential and theoretical future profits may be sued for, and will be adjudicated by a tribunal of corporate attorneys, in secret.  The compensation for losses, both in the present and in the misty imaginary future, may include seizing the assets of the government being sued.  Those are your assets, people.  Those assets might be buildings, lands, any amount of taxpayer monies paid to the IRS (in the USA) in the form of taxes, tariffs on our (admittedly few) exports, or – who knows what the corporations might demand? – the funds held in the social security system.

This is not “free market capitalism”.  This is simply an oligarchic/corporate taking; a shake-down of nations in a magnificent and breathtaking coup.  Started by former President Cheney Bush. Carried forward, fully supported, and gleefully promoted by President Obama.  And although about 170 members of the House have signed letters objecting to the fast-track method of cramming this thing through, that does not necessarily indicate an objection the TPP per se.  This number also indicates that there is a large set of House members who don’t object to fast-tracking (or, presumably, again, to the trade agreement itself).

Occucards has an informative card on the TPP; you may read it and/or buy copies to pass around here:

http://www.occucards.com/tpp/

 
4 Comments

Posted by on November 13, 2013 in corporatocracy, trade agreements

 

Snowden denied clemency.

And “espionage” is a French word, which proves the French spy on everyone, too.

From the Free Online Dictionary:
es·pi·o·nage  (sp–näzh, -nj) n.
The act or practice of spying or of using spies to obtain secret information, as about another government or a business competitor.  [French espionnage, from espionner, to spy, from Old French espion, spy, from Old Italian spione, of Germanic origin; see spek- in Indo-European roots.]

The White House and leading lawmakers have rejected Edward Snowden’s plea for clemency and said he should return to the United States to face trial….

Dan Pfeiffer, an Obama administration adviser, said on Sunday the NSA whistleblower’s request was not under consideration and that he should face criminal charges for leaking classified information. Dianne Feinstein and Mike Rogers, respectively the heads of the Senate and House intelligence committees, maintained the same tough line and accused Snowden of damaging US interests.

The former NSA employee this week appealed for clemency and an opportunity to address members of Congress about US surveillance. […]

Feinstein, a Democratic senator from California, remained implacable. “He’s done this enormous disservice to our country. I think the answer is ‘no clemency’,” she told CBS’s Face the Nation.

The former NSA contractor could have blown the whistle on excesses by contacting the House and Senate intelligence committees, Feinstein said. “We would certainly have seen him … and looked at that information. That didn’t happen.” […]

The House intelligence committee chairman [Mike Rogers] said pressure to rein in surveillance risked repeating previous curbs which had disastrous consequences.

“We did this in the 1930s and … that led to a whole bunch of misunderstandings that led to World War II that killed millions and millions of people. We did the same darn thing that led up to the [9/11] Osama bin Laden effort.”

Rogers scorned European protestations over US spying as theatrical, saying US allies did plenty spying themselves: “I think there’s going to be some best actor awards coming out of the White House this year, and best supporting actor awards coming out of the European Union.”

He added: “Espionage is a French word, after all.” […]

http://www.rawstory.com/rs/2013/11/03/white-house-rejects-snowden-clemency-request/

So Congress would have listened to Snowden with polite attention had he come to them before (oh, really?  anyone buying this shit?), but now, not so much.  Now they would like to put him in solitary confinement next to Chelsea (Bradley) Manning.  No soup for you, Snowden.  Interesting how the exact same information that might have been considered useful and interesting a scant few months ago is now considered treasonous.

I was intrigued by Mike Rogers’ (head of the House Intelligence [sic] Committee) comments regarding WWII and bin Laden and so looked up the full transcript for yesterday’s “Face the Nation”, which I had not viewed when it aired.

From transcript of  3 Nov., 2013 “Face the Nation”; Mike Rogers talking to Bob Schieffer:

ROGERS: “[…] And here’s the problem, Bob. We did this in the 1930s. We turned it off. In 1929, secretary of State at that time, where they were collecting information to protect America said, you know, we shouldn’t do this. This is unseemly. They turned it off. Well, that led to a whole bunch of misunderstanding that led to World War II, that killed millions and millions of people. We did the same darned thing leading up to the Osama bin Laden effort, where we didn’t want to talk to each other, we didn’t coordinate intelligence activities, we didn’t want to get certain things. And it led to 9/11, that took the lives of 3,000 Americans. […]”

I think Rogers has missed out on a few years of reporting about the whole 9/11, bin Laden scenario.  Without getting into any deeper questions about bin Laden’s known ties to our CIA (Snowden himself, ironically or not, also worked for the CIA) or the serious and obvious canards in the official Congressional 9/11 report, Rogers must be aware that it came out very shortly after 9/11 that then-President Bush had, in fact, been given reliable intelligence about the plot and had shrugged it off.  He refused to act on it – the problem was not that the US spy apparatus had been “turned off”.  God only knows what Rogers means by the WWII reference.

Later in the show, Schieffer talks to David Sanger, chief Washington correspondent for the NYT:

“SCHIEFFER: And back to the David, what happens now on this NSA, as these revelations continue to come out?

“SANGER: Well, there are two reviews that are under way. One is internal to the White House. The White House has said very little about it. Then there’s an external one of five former members of the intel community, some legal scholars who are supposed to report by the middle of December and say that report will be quite public. But I think what you’re discovering right now is that the White House is standing firm on the domestic collection of this bulk data about all the phone calls we all make. I think, in the foreign arena, the Angela Merkel kind of interceptions, you’re going to see far more oversight.

And I think that’s, sort of, what you were hearing when you heard Senator Feinstein today issue those complaints. I don’t know how widespread her view is.  But my guess is it’s going to be increasingly difficult to justify doing this kind of surveillance on allies who you need as partners in not only intelligence collection but making sure that our cybersystems are safe.”

http://www.cbsnews.com/8301-3460_162-57610589/face-the-nation-transcripts-november-3-2013-feinstein-rogers-hayden/

There is no intention of curtailing the massive collection of all of our communications.  In fact, Feinstein and Rogers, both mentioned above, are jointly working on a bill – soon to be introduced to Congress – which will “explicitly legalize mass surveillance”.  – http://www.defendingdissent.org/now/judiciary-vs-intelligence/

But that is the point, really.  There will be no “debate” amongst the public, the politicians, and the governmental spy agencies – and the NSA is merely one of the dozens of agencies keeping close tabs on our movements and utterances, don’t forget – the point is that now you know for sure what you may have simply suspected before.  If you are aware of this whole NSA data-collection thing, and a surprising number of Americans are blithely ignorant of it, you will be more careful in what you write or say in public.  This serves to keep the dissidents in line and to effectively shut up the more timid who might otherwise be tempted to object.  And when they distort your emails or phone calls to charge you with “suspicious activities”, you can’t say you didn’t know they were collecting your private data.  You’re being warned: you are being watched as closely as any other “terrorist”.  They want you to know that.  It is a simple, but very efficient, method of intimidation.

 
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Posted by on November 4, 2013 in civil rights, Congress, security state