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September 22, 2008 (LPAC)-At 9 PM on Sunday night, the Federal Reserve Board approved the applications of Goldman Sachs and Morgan Stanley to become bank holding companies. With that action, the last of the major Wall Street investment banks will disappear, some 14 months after Lyndon LaRouche declared the financial system dead. As we saw with Bank of America's purchase of Merrill Lynch, the remaining investment banking operations are being reorganized into the commercial banking apparatus, where their demise will allegedly be more manageable. While many explanations have been advanced as reasons for the two Wall Street giants to make this move, the simple fact is that, with the demise of the securities markets, they were no longer viable, and this is the only hope they have of survival. As bank holding companies regulated by the Fed, they will of course have access to the growing list of bailout facilities.

What is now planned is a rapid consolidation of the banking sector into a handful of giant banks with both depository and speculative functions, combining commercial and investment banking in ways which hark back to the era before the Great Depression, when banks knowingly dumped bad paper on their customers as a way of protecting themselves in the crash. FDR used the Glass-Steagall Act of 1933 to drive a wedge between commercial banking and investment banking as a way of stopping such abuse. Congress, at the behest of the banks, began undercutting Glass-Steagall in the 1980s, and it was officially repealed in 1999, making it easier for the banks to return to their rapacious, pre-FDR ways.

LaRouche said on September 15 after Lehman Brothers declared bankruptcy, "The banks and financial institutions are all sick, but you have to start minimizing what you try to bail out at this point...This is a question of triage. Now the triage begins."

Treasury Secretary Paulson, Fed Chairman Ben Bernanke and the rest of the Plunge Protection Team are attempting their own form of triage, trying to save as much of the speculative paper as possible. Everyone should know that Paulson is a former chairman and CEO of Goldman Sachs. The fox is indeed in charge of the chicken coop.

As the waves of bank failures begin, Goldman Sachs and Morgan Stanley will now be in a position to begin gobbling banks up after the FDIC has eaten the losses, and thus become major banks themselves. They, and the other giants like J.P. Morgan Chase, Citigroup and Bank of America, can then use your bank deposits as their own speculative piggy banks.

This crisis has just begun, and will grow far worse over the coming hours and days. As it does, the relevant and responsible people ought to be reminded--even if it requires a two-by-four to jog their memories--that this crisis would not have been possible without the systematic reversal of President Franklin Roosevelt's banking regulations, which, among other virtues, kept the risky activities of the investment banks separate from the necessary activities of commercial banks. FDR's regulations represented the high-water mark of modern national financial regulation, which is precisely why the bankers demanded that his regulations be repealed, in favor of the old imperial model.

As LaRouche repeated on the LaRouche Show on September 20, "What has to be done is a number of measures which I've prescribed; but, otherwise, we have to take action based on the principle of law we used to have: Glass-Steagall. What we have to do now, is immediately go in and take all the banks that are real banks, chartered banks, state banks, and Federal banks, on which the communities are dependent, and introduce what I proposed last year as the Homeowners and Bank Protection Act. We can not have mass foreclosures against our citizens. We can not have banks that are essential to the community being closed down. So, we have to separate the part of banking which is true banking, from this funny-money banking which has been gobbling up the real banks."