The first step which must be taken is the application of the Glass-Steagall standard to our banking system. This diagram gives a conceptual overview of what the Glass-Steagall standard does.
What is “Glass-Steagall”?
The 1933 Glass-Steagall Act was a leash on Wall Street for 66 years. It established a firewall to protect the financial functions of banking that were necessary to the daily lives of the American people, from the speculators on Wall Street. Specifically, under Glass-Steagall, commercial banks which held deposits protected by the Federal Deposit Insurance Corporation (FDIC)—the savings accounts, chequing accounts, and business trading accounts—were forbidden from owning, or being owned by, Wall Street investment banks. It didn’t stop speculation, but it severely curtailed it, because it denied Wall Street investment banks any access to the enormous deposit base of the American people. It was when Glass-Steagall was repealed in 1999, that Wall Street finally got access to the commercial banks and their deposits, and all forms of speculation expanded exponentially.
Australia has never had the Glass-Steagall standard applied to our banking system. The Commonwealth Bank when it was government-owned provided a check on the power of the private banks, but since the Hawke-Keating "reforms" of 1983, our nation's banking system has been deregulated and opened up to foreign banks. Simply re-establishing a government-owned national credit bank will not be sufficient. Australia needs the Glass-Steagall standard. All commercial banks must completely divest themselves of all non-commercial banking activity and banking units. No cross-management or cross-ownership with investment banking units may remain. Commercial banks alone will be protected by governments; every other entity is on its own. As the funny money is left to vaporise only what is real remains, and no matter how bad that looks, we can deal with it. We will enact the Commonwealth National Credit Bank Bill.
NEW: Legislation for a Glass-Steagall separation of Australia's banks, the Banking Reform (Separation of Banks) Bill 2018, with Explanatory Memorandum.
Proposal for a Glass-Steagall separation of Australia's banking system
Read Why Australia urgently needs a Glass-Steagall banking separation.
Download the Glass-Steagall Now! pamphlet (PDF, 9MB)