“Too Big to Fail” & 21st-Century Glass-Steagall
I’ve spent years fighting for a financial system that works for ordinary people, and not just for the top 1% of income earners. If banks are “too big to fail,” they have an incentive to make risky investments and are therefore too big to exist. Together with Senator Bernie Sanders and Senator Elizabeth Warren, I too sponsor reinstating the Glass-Steagall Act, which instituted regulations in the aftermath of the Great Depression in an attempt to avoid another economic disaster.
By reinstating a 21st-century Glass-Steagall, we will be separating commercial banking from investment banking which will buffer normal Americans from risky investments. We must break up the Big Banks! Banks that are “too big to fail” make risky investments because they know that the American taxpayer will bail them out — and are therefore too big to exist. I strongly support the Robin Hood Tax. We must place a tiny fraction of 1% tax on Wall Street Speculation. This changes the tax code to discourage short-term gambling and instead promote long-term investing.
Glass-Steagall was passed in 1933, in the wake of the Great Depression, in order to prevent banks from making risky investments with the savings deposits of average Americans and then falling back on federal deposit insurance when their bets go bad. Glass-Steagall was mostly repealed in 1999 when President Clinton signed the Financial Services Modernization Act. Many economists argue that its repeal contributed to the severity of the 2008 financial crisis.
When banks are so large that their bankruptcy would devastate the economy, the government is forced to bail them out. If banks know that they’ll be bailed out, they’ll chase profit by gambling and making risky investments knowing that they can’t really lose. The 2010 Dodd-Frank financial reform law defines these “big banks” as having at least $50 billion in assets.
Breaking up the biggest financial institutions would reduce the level of financial monopolization in America and the corresponding political influence of the largest banks. Too few banks control too much of our money. Not only is it risky for the reasons stated above, but it gives them even more influence in Congress. At the end of 2014, the largest four banks held 35% of all bank deposits. These same four banks spent at least $21 million lobbying the federal government in 2014.
Stock markets are intended to be an exchange where a company can sell ownership in return for working capital. In other words, it’s meant for companies to sell shares for cash that they then invest back in the business. But increasingly, the markets are used as an instrument to gain short-term profits by quickly trading stocks with tiny price differences and using other high-risk trading methods to make a quick return.
Taxing a financial transfer does disincentivize selling a stock or bond. However, the small percentage of the tax means that only trading on the smallest of margins is no longer profitable. This tax would target the high-frequency trading that uses these tiny margins for profit without having meaningfully invested in a company.
My opponent, Mimi Walters, has done nothing for our district or our nation for that matter to help reverse this dangerous trend. She has been in US Congress and California Senate and Assembly for more than a decade overseeing the takeover of our beloved country by these special interests. Government can grow bigger, as long as it is helping her special interest campaign contributors. Once more, she is not working for WE the People. Instead, she is working for her Wall Street and Billionaire Class campaign contributors. See which industries are Walters' largest contributors here!
Walters’ Voting/Support Record:
- YES on bigger government for her special interests campaign contributors
- YES on protecting subsidies and tax-breaks granted to large businesses
- NO on ending oil subsidies and ending tax-breaks for large businesses
- NOT standing up for WE the People
Varasteh’s Congressional Pledge:
- Restore WE the People’s government back to her rightful owners
- Election finance reform/Money out of politics
- Keep corporations and unions out of elections
- Lobbyist transparency
- Bill transparency
- Leaner government by eliminating earmarks, loopholes, and subsidies
- Protect whistleblowers
- Reform subsidies and tax-breaks granted to large businesses
- Reform regulations that choke small and medium businesses from starting and growing
- Standing up for WE the People
- Not for sale