To the editor:
I appreciate the series of articles recently posted on The Berkshire Edge entitled “It’s Not That Simple” because many small Berkshire County towns face the same dilemma. Considering there are larger macro-economic forces at play, it further complicates local decision making.
After the 1929 crash on Wall Street, the Bank for International Settlements (BIS) made an agreement which gave them full immunity from prosecution. On January 20, 1930, the Swiss Federal Council and the Bank for International Settlements signed this agreement in order to determine the legal status of the BIS and all other banks operating under this BIS Agreement. As you can see in Article 14 and 15 of this agreement: “Privileges and Immunities, were Granted to all Bank Officials: regardless of nationality.”
The Glass-Steagall Act was also passed in the wake of the 1929 stock market crash, in order to set up a regulatory firewall between commercial banks and high-risk investment bank activities. The aim of the Act, passed in 1933, was to limit local commercial banks from using depositor’s money in higher risk investment activities. The Act was repealed in 1999, under the Clinton Administration, which set the stage for the mortgage-backed security crisis of 2007–2008. Prior to this, the American Dream was alive and well; a home was an individual’s rightful place to live, protected under our Constitution.
The United States has been the beacon of hope for many people around the world, because our Constitution and Declaration of Independence are predicated on John Locke’s treatise on inalienable rights. Locke believed people are born with natural rights: life, liberty, property, and the pursuit of happiness. The duty of the government is to protect those rights, not to infringe upon them. The people are the sovereign power; the government gains authority through the consent of the governed.
Our American Dream has been vanishing since 2007-2008, when nearly $5 trillion in mortgage-backed securities with a questionable value were pooled together in tranches and given dubious credit ratings to be sold on stock market exchanges both in the US and abroad. This is when a home transitioned from an individual’s rightful place to live in harmony with his community, to a commodity packaged on Wall Street, left to the vagaries of banking institutions and sold to the highest bidder.
Due to the repeal of the Glass-Steagall Act, banks were emboldened to take extraordinary risks and they sacrificed the American Dream in the process. The BIS Agreement is still in effect today, therefore there were no prosecutions and justice was never served. While many Americans lost their homes and their hope for the future, our government failed to protect the social contract.
The Fraser Institute measures economic freedom in its annual report. Each country gets a ranking based on four criteria: 1) personal choice, 2) voluntary exchange coordinated by markets, 3) freedom to enter and compete in markets, and 4) protection of persons and their property from aggression by others. If you click on their Dataset, you can see the US currently ranks quite high (6th), because we are still allowed to “own property as an inalienable right protected under our Constitution,” compared to Russia (100th) or China (116th) . The data collected by the Fraser Institute demonstrates people around the world are lifted out of poverty when they are allowed to own property and participate in free markets — something to be protected, not legislated away.
Unfortunately, adding more onerous government regulations, while leaving the underlying problem in place, will most likely accelerate our descent toward the bottom of the Fraser Institute’s measure of economic freedom scale. However, reinstating the Glass-Steagall Act, while simultaneously protecting housing as an inalienable right of the individual and eliminating it as a commodity traded on Wall Street, may go a long way toward restoring the American Dream.