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Elizabeth Warren: The Woman Who Knows Too Much about Wall Street

Courtesy of Pam Martens

Senator Elizabeth Warren Questions SEC Chair Jay Clayton During Senate Banking Committee Hearing, September 26, 2017

Senator Elizabeth Warren

By Pam Martens and Russ Martens

In May 2012 when New York Times reporter Andrew Ross Sorkin wrote his severely factually-challenged analysis of whether the repeal of the Glass-Steagall Act had led to the Wall Street collapse in 2008, he seemed to have an agenda of undermining Elizabeth Warren, then running for her first U.S. Senate seat from Massachusetts, in her push to restore the Glass-Steagall Act. That legislation, which was formally known as the Banking Act of 1933, created Federal insurance on deposits held in commercial banks while barring those banks from being under the same roof with the Wall Street casino – that is, high risk securities underwriting and trading firms known as investment banks and broker-dealers.

The legislation grew out of two intense years of Senate investigations from 1932-1934 which concluded that the “unsavory and unethical” practices by Wall Street securities trading firms had played the dominant role in the financial collapse of the 1930s. The Glass-Steagall legislation had protected the U.S. financial system from any catastrophic collapse for 66 years until its repeal under President Bill Clinton in 1999. (Clinton’s administration was heavily influenced by Wall Street figures.) Just nine years after the repeal, Wall Street would collapse in a replay of the early 1930s.

Sorkin wrote the following in his 2012 article, attempting to show that separating banks would not have prevented the collapse:

“The first domino to nearly topple over in the financial crisis was Bear Stearns, an investment bank that had nothing to do with commercial banking. Glass-Steagall would have been irrelevant. Then came Lehman Brothers; it too was an investment bank with no commercial banking business and therefore wouldn’t have been covered by Glass-Steagall either. After them, Merrill Lynch was next — and yep, it too was an investment bank that had nothing to do with Glass-Steagall.

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