Humpty Dumpty had a great fall even though there wasn’t a Wall!

During the video The Warning, there were references to:

the demise of Lehman Brothers http://www.pbs.org/wgbh/pages/frontline/meltdown/themes/lehman.html

Procter & Gamble suing Bankers Trust for selling P&G toxic derivatives http://www.pbs.org/wgbh/pages/frontline/warning/etc/warnings.html?utm_campaign=videoplayer&utm_medium=fullplayer&utm_source=relatedlink

The Procter & Gamble  situation was the “canary in the mine shaft” for Brooksley Born and her agency, the CFTC, Commodity Futures Trading Commission. It brought the “black box” derivatives investment scheme strongly to her attention.

The Glass-Steagall Act was created by the U.S. government to shield the American citizen from the disasters of the 1929 stock market crash. The Act was only 33 pages in length! But it sure seemed to work protecting the American investor by creating a wall between investment and commercial banking. Below are two links, one references the repeal of Glass-Steagall in 1999 and the other is a link to the actual Act document.

The repeal of Glass-Steagall Act
Glass-Steagall Act – timeline of existence and its repeal
http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html

The actual Glass-Steagall bill:

Click to access 21stCenturyGlassSteagall.pdf

Two banks are mentioned in The Warning video. Lehman Brothers was “allowed” to fail but Bear Stearns was engineered to be purchased by another bank. Lehman Brothers was considered an investment bank versus being a commercial bank or a retail bank. Bear Stearns was also an investment bank. Here’s an article about the bailout of Bear Stearns http://www.wsj.com/articles/SB124182740622102431. There has been speculation about why one investment bank was chosen to be saved and the other allowed to fail.

If you have not viewed the video The Warning, here’s the link to it on my blog entry entitled: Regulate derivatives? No way!!!. https://bjfopinion.wordpress.com/.
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Edge