Blair Murdered Glass-Steagall, Charges French Society of Financial Analysts

May 18, 2010 (LPAC) PARIS — Nicolas J. Firzli, the chair of the Paris-based Canadian European Economic Council (CEEC) and former officer of Axa Investment Managers, wrote a long article in defense of Glass-Steagall called "Financial orthodoxy and Banking Regulation: The Lessons of the Glass-Steagall Act," Published in the first quarter issue of Analyse Financiere, the magazine of the French Society of Financial Analysts (SFAF).

Firzli starts by blaming the current mess by the "complacency" of national governments towards large financial corporations and their acceptance of the "progressive phasing out of control mechanisms presented as necessary for the 'modernization' of national economies." After an accurate description of Carter Glass and Henry Steagall's drive for the 1933 bill, Firzli, in a clear reference to today, notes that "the law stopped abuse for over six decades... from 1933 on, 'sellers will no longer be evaluators' and 'lenders ceased to be advisors.'" [backtranslated from the French]

Most interestingly, Firzli notes Tony Blair's personal role in rolling back the Glass-Steagall standards. "In the middle of the 1990s, Bill Clinton and Tony Blair develop and put into practice a 'new way of doing politics' on the center-left which became a model for many European leaders whatever their political tendencies: to impose so-called inevitable reforms, always aimed at weakening the state, taking down public services and full-fledged deregulation, Clinton and Blair called on the advice of 'impartial' experts from New York investment banks and Boston consultancies. Tony Blair even hired McKinsey and 'farmed' to them entire sectors of the British government's policy."

The Blair policy continued under Bush. Despite the Enron scandal, Bush's entourage, according to Bush's Secretary of the Treasury Paul O'Neill who tried to impose regulation, expressed nothing but disdain for the Treasury Department experts whom they branded "sterile academics" generally "lost in their thoughts."

"The disdain for academics and economic experts of the Treasury Department (who were precisely the ones consulted by Senator Carter Glass in 1932-33) is the sign of a dangerous civilian and intellectual decline... We are witnessing at a progressive weakening of the rational-humanist paradigm of the Renaissance and the Enlightenment, and together with that, we see the emergence of a new political paradigm founded on the permanent manipulation of national cultural symbols and the use of media announcement effects."

To conclude, Firzli notes that today, "the situation is far different in post-Communist China which adopted two major laws largely inspired by Glass-Steagall: the law on commercial banks of 1995, completed with the law on stock market traders of 1998 (brought into force at the very moment the U.S. started to consider scrapping Glass-Steagall). Concerned above all with their economic efficacy, the Chinese political elites decided in favor of a strict separation between depository banks and investment banks: of all industrial countries, China is the country whose financial system has best survived the crisis."