It’s time to reinstate Glass-Steagall.
The Glass-Steagall Act, also known as The Banking Act of 1933, prohibited commercial banks from engaging in the investment business. It was repealed in 1999, removing the protective barriers it had erected — namely certain monetary policy restrictions and prohibiting banks from playing Craps with economic safeguards that provided some assurance of sound money.
I’m no economics expert, but since the repeal of Glass-Steagall, there has been nothing sound about the financial mess that’s been created. Instead of flinging poop at billionaires and bankers, and threatening to cut off their heads, maybe Fleabaggers should consider putting pressure on Congress to reinstate Glass-Steagall.
In December 2009, Senators John McCain and Maria Cantwell proposed the reinstatement; in 2010, Obama and economist Paul Volcker proposed what appears to be half-baked solution, allowing conflicts of interest to remain and for financial entities to continue to be too big to fail; and in 2011, Representative Marcy Kaptur, Democrat from Ohio, introduced H.R. 1489, the Return to Prudent Banking Act of 2011, which would essentially restore the restrictions and protections of the original Act enacted in 1933.
In December 2009, on Bob Brinker’s Moneytalk, Brinker said:
“[Reinstating the Glass-Steagall Act] would prohibit the commercial banks from dealing in the risky gambling arena known as investment banking. The gambling arena that took down Bear Stearns. The gambling arena took away Lehman Brothers. And the gambling arena that forced Merrill Lynch into a shotgun wedding with Bank of America. This is a wonderful idea because it would force so called too-big-to-fail bank-holding companies to return to the business of conventional banking and leave the risky business to the gamblers at the investment banks…Now the proposed Senate legislation gives companies one year to comply. I’m okay with that. The important thing is we get it done……It does have implications…”
To reinstate Glass-Steagall would be to restore a considerable measure of fiscal sanity to the tanking US economy, and place a little stock in responsible trading instead of erratic gambling.