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For Immediate Release
National Farmers supports legislation for increased banking, economic security
AMES, Iowa (July 23, 2013)—At the National Farmers national
board meeting July 17, national board members supported measures in the proposed
21st Century Glass Steagall Act and the proposed Return to Prudent Banking Act,
citing the need to prevent a potential banking crisis domino effect, and ultimately
protect the economy.
Both bills would remove the connection of investment banking
and commercial banking in one institution. In investment banks, products such as
hedge funds rule the day. Commercial banks primarily provide services such as checking
and savings. The 21st Century Glass Steagall Act (S. 1282) was introduced July 11
by Elizabeth Warren, (D-Mass.), John McCain, (R-Ariz.), Maria Cantwell, (D-Wash.)
and Angus King, (I-Me.)
If passed, large financial institutions would be unable
to access FDIC-insured savings and deposits, using the money and a variety of investment
products to speculate. Ultimately, it would end practices relying on the belief
that a banking type of entity could grow too large to buckle under financial strain.
National Farmers leadership recognizes debate continues
about the causes of the Great Recession, and whether the safeguards this bill provides
would have prevented that crisis. However, the internal connection in an institution
between investment and commercial banking increases risk exposure. At National Farmers,
we are intentional about managing price risk for producers, and respectfully request
Congress to be intentional, manage banking risk and protect lending customers on
farms and in cities alike.
Many economists say this is a more secure system, and would
prevent future problems of investment risk exposure to commercial banks and their
customers. National Farmers, for the benefit of agriculture and consumers, supports
reinstating long-held safeguards.
The Return to Prudent Banking Act of 2013 was introduced
in the U.S. House (H.R. 129) and the U.S. Senate (S. 985) in May. Previously protective
measures were in place in The Glass-Steagall Act (Banking Act of 1933), but those
were repealed in 1999, with the Gramm-Leach-Bliley Act.
Some who urged repeal of the original Glass-Steagall –
now publicly say they were wrong. Former President Bill Clinton. Former Speaker
of the House Newt Gingrich. Former Merrill Lynch CEO David Komansky. U.S. Representative
Steny Hover, (D-Md.).
The Dodd-Frank Wall Street Reform and Consumer Protection
Act of 2010, was a start toward correcting problems, and was meant to fill loopholes
for over-the-counter derivatives, asset-backed securities, hedge funds, mortgage
brokers and payday lenders. It was also intended to end taxpayers’ vulnerability
to picking up the bill if a large conglomerate failed, known as Too Big To Fail
bailouts. And the 2010 Act created a council to examine systemic risks caused by
conglomerates and products or financial activities that could threaten the economy.
But the 2010 legislation didn’t go far enough.
Other organizations support addressing core banking security
issues, such as the systemic risk of Too Big To Fail, including the Independent
Community Bankers Association, and National Farmers Union, which supported the Return
to Prudent Banking Act.
Farmers, ranchers and consumers count on their financial
institutions to remain sound. National Farmers national board members support measures
isolating commercial banking and investment banking, and other provisions in these
bills. The organization urges passage of legislation that increases security of
America’s banking system.
National Farmers is a group marketing and price negotiation
provider for the nation’s farmers and ranchers.