SENIOR SENATE FEDERAL PROPOSAL NO. 6

INTRODUCED BY SENIOR SENATOR FAUSTMAN

LEGISLATIVE COUNSEL'S DIGEST

SFP 6: FINANCIAL INSTITUTIONS

UNDER EXISTING LAW, THE COMPTROLLER OF THE CURRENCY REGULATES FEDERALLY-CHARTERED NATIONAL BANKS. UNDER EXISTING LAW, THE COMMISSIONER OF FINANCIAL INSTITUTIONS REGULATES STATE-CHARTERED BANKS.

THIS MEASURE WOULD MEMORIALIZE THE CONGRESS AND THE PRESIDENT TO ENACT LEGISLATION THAT WOULD ESTABLISH LAWS SIMILAR TO THE FEDERAL GLASS-STEAGALL ACT, AS ORIGINALLY ENACTED, TO HELP RESTORE THE INTEGRITY OF FINANCIAL INSTITUTIONS.

VOTE: MAJORITY.

SFP 6: RELATING TO FINANCIAL INSTITUTIONS

WHEREAS, IN THE 1920’S, BANKS DEALT IN SPECULATIVE PROJECTS IN THE SCRAMBLE FOR WEALTH, WHICH BROUGHT ABOUT THE CRASH OF 1929; AND

WHEREAS, IN 1933, SENATOR CARTER GLASS AND CONGRESSMAN HENRY STEAGALL INTRODUCED LEGISLATION THAT LIMITED THE CONFLICT OF INTEREST THAT OCCURRED WHEN BANKS UNDERWROTE STOCKS AND BONDS THAT WERE OF INTEREST AND BENEFIT TO THE BANKS THEMSELVES. THE FEDERAL GLASS-STEAGALL ACT CREATED THE FEDERAL DEPOSIT INSURANCE CORPORATION, WHICH INSURED BANK DEPOSITS AND STRENGTHENED THE FEDERAL RESERVE; AND

WHEREAS, BEGINNING IN THE 1960’S, LAWS WERE PASSED THAT BEGAN TO DIMINISH THE PROTECTIONS OF THE GLASS-STEAGALL ACT, AS ORIGINALLY ENACTED, CULMINATING IN THE REPEAL OF THE ACT IN 1999, AND OVER TIME BANKS WENT BACK TO DOING WHAT HAD HELPED BRING ABOUT THE DEPRESSION IN THE 1920’S AND 1930’S; AND

WHEREAS, THIS HAS RESULTED IN MANY HARDSHIPS TO THE ELDERLY, THE SUDDENLY UNEMPLOYED, THOSE HELPING TO SUPPORT OTHERS, AND TO THE PATIENTS OF HEALTH PROFESSIONALS WHO HAVE LOST THEIR EMPLOYMENT; AND

WHEREAS, THE MAJORITY OF THE ELDERLY HAVE EITHER SOCIAL SECURITY, WHICH IS SELDOM ENOUGH, OR SAVINGS, WHICH IS OFTEN SPENT ON HEALTH CARE, AND CANNOT AFFORD BANKING THAT IS INADEQUATE. THE ELDERLY ARE NOT IN A POSITION TO FIND JOBS, AND MANY TAKE CARE OF OTHER FAMILY MEMBERS; AND

WHEREAS, THE CURRENT FINANCIAL CRISIS HAS RESULTED IN MANY INDIVIDUALS LOSING THEIR HOMES AND LIFE SAVINGS; AND

WHEREAS, THE PUBLIC AT LARGE ARE IN DIRE CIRCUMSTANCES; AND

WHEREAS, IT IS DIFFICULT TO ACCEPT THAT FINANCIAL INSTITUTIONS ARE RECEIVING HUGE GRANTS OF PUBLIC FUNDS EVEN THOUGH THEY PLAYED A BIG PART IN THE CURRENT FINANCIAL CRISIS; AND

WHEREAS, ENACTING LAWS SIMILAR TO THE FEDERAL GLASS-STEAGALL ACT, AS ORIGINALLY ENACTED, COULD HELP RESTORE THE INTEGRITY OF FINANCIAL INSTITUTIONS; NOW, THEREFORE, BE IT

RESOLVED, BY THE SENIOR SENATE AND THE SENIOR ASSEMBLY, JOINTLY, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA AT ITS 2009 REGULAR SESSION, A MAJORITY OF THE MEMBERS VOTING THEREFOR, HEREBY MEMORIALIZES THE CONGRESS AND THE PRESIDENT TO ENACT APPROPRIATE LEGISLATION, SIMILAR TO THE GLASS-STEAGALL ACT, AS ORIGINALLY ENACTED, THAT WOULD ADDRESS THE CONCERNS SET FORTH IN THIS MEASURE; AND BE IT FURTHER

RESOLVED, THAT A COPY OF THIS MEASURE BE TRANSMITTED TO THE PRESIDENT AND VICE PRESIDENT, THE SPEAKER OF THE HOUSE OF REPRESENTATIVES, THE CHAIRPERSONS OF THE HOUSE AND SENATE COMMITTEES ON AGING, AND TO EACH SENATOR AND REPRESENTATIVE FROM CALIFORNIA IN THE CONGRESS OF THE UNITED STATES.

RN 09 16461

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