The repeal of the Glass-Steagall act in 1999 still stands as one of the most destructive decisions of modern politics. Republicans and Democrats reached across the aisle to deregulate banking by repealing a set of regulatory laws with more than half a century of success behind them.
Glass-Steagall allowed for the merger of investment and consumer banks into the the infamous Big Banks of the present day. Anyone who’s paid any attention in the last decade will recognize these Wall Street giants as the institutions which crashed the economy in 2008 and have held a stranglehold over elections since the passing of Citizens United.
Now, 16 years after the repeal of Glass-Steagall, prominent Democratic senators Elizabeth Warren and Bernie Sanders are spearheading an effort to reinstate the Glass-Steagall regulations to help prevent another economic collapse similar to the Bush Recession of 2008. Elizabeth Warren’s website states:
“The legislation, first introduced in the 113th Congress by Senators Warren, McCain, Cantwell, and King, would separate traditional banks that have savings and checking accounts and are insured by the Federal Deposit Insurance Corporation from riskier financial institutions that offer services such as investment banking, insurance, swaps dealing, and hedge fund and private equity activities. The bill would clarify regulatory interpretations of banking law provisions that undermined the protections under the original Glass-Steagall and would make ‘Too Big to Fail’ institutions smaller and safer, minimizing the likelihood of a government bailout.
Warren herself stated:
“Despite the progress we’ve made since 2008, the biggest banks continue to threaten our economy. The biggest banks are collectively much larger than they were before the crisis, and they continue to engage in dangerous practices that could once again crash our economy. The 21st Century Glass-Steagall Act will rebuild the wall between commercial and investment banking and make our financial system more stable and secure.”
These regulations are so sensible that even Republican Senator John McCain took a break from his usual Republican idiocy to say:
“Since core provisions of the Glass-Steagall Act were repealed in 1999, shattering the wall dividing commercial banks and investment banks, a culture of dangerous greed and excessive risk-taking has taken root in the banking world. Big Wall Street institutions should be free to engage in transactions with significant risk, but not with federally insured deposits. If enacted, the 21st Century Glass-Steagall Act would not end Too-Big-to-Fail. But, it would rebuild the wall between commercial and investment banking that was in place for over 60 years, restore confidence in the system, and reduce risk for the American taxpayer.”
Though this bill is unlikely to make it past Wall Street’s crony-controlled Senate, the fact that Democrats are introducing legislation to the floor to actually address the rampant injustice of banking deregulation is cause to celebrate.
