Friday, January 01, 2010
Bill Clinton signs the repeal of the Glass-Steagall Act in November 1999
According to his own campaign manager, U.S. Senator John McCain (R-AZ) lost the 2008 presidential contest because he was on the wrong side of the Wall Street debacle, siding with the pro-business philosophies that helped create the mess. Now, the conservative McCain wants to restructure the composition of the banking business and reinstate the New Deal-era restrictions that kept financial institutions from becoming “too big to fail.” But the man who beat him for control of the White House, Barack Obama, isn’t interested in imposing the kind of stiff regulations that are often considered the calling card of liberal Democrats.
McCain has joined forces with Democratic Senator Maria Cantwell of Washington to restore the Glass-Steagall Act of 1933, which separated commercial banks, those that held the deposits of everyday citizens, from investment banks that engaged in risky profit-making strategies. This separation protected depositors’ savings from the possible excesses of the investment banks, and it worked well for 65 years until Congress revoked it in 1999. If the McCain-Cantwell legislation were to become law, behemoths like Bank of America and JPMorgan Chase would be split up into either investment or commercial banks.
The bill is similar to an amendment introduced in the House by Congressman Maurice Hinchey (D-NY) which failed to move. Because of the power of the banking industry, observers give the McCain-Cantwell effort little chance of succeeding, even with support from the likes of former Federal Reserve Chairman Paul Volcker and The Wall Street Journal.
-Noel Brinkerhoff
An Odd Post-Crash Couple (by Michael Hirsh, Newsweek)
Congressmen to Call for Break-Up of Biggest Banks (by Shahien Nasiripour, Huffington Post)
Son of Glass Steagall? Banking Firewall Could Make a Comeback (by Brian O’Connell, Main Street)
Reviving Glass-Steagall Means Escalating ‘War’ on Wall Street (by Alison Vekshin and James Sterngold, Bloomberg)
10-Year Anniversary of the Bill That Led to the Current Economic Crisis (by Noel Brinkerhoff and David Wallechinsky, AllGov)
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