"RPT" for Congress (50+1)
Richard Torregano (Louisiana's 6th Congressional District
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Glass-Steagall
The 2nd Part
Glass-Steagall

 

The Glass-Steagall Act or Banking Act of 1933:

 

An Act to provide for the safer and more effective use of the assets of banks, to regulate interbank control, to prevent the undue diversion of funds into speculative operations, and for other purposes.”

 

After the Act was attacked by financial interests for decades, President Clinton signed the repeal of critical sections of the Glass-Steagall Act in 1999, breaking down the wall between commercial banking and high risk investment activity.

 

Economist and Nobel Laureate Joseph Steiglitz has stated:

 

Given what the economy has been through, it is clear that the federal government should reinstitute some revised version of the Glass-Steagall Act. There is no choice: any institution that has the benefits of a commercial bank – including the government's safety nets – has to be severely restricted in its ability to take on risk.

There are simply too many conflicts of interest and too many problems to allow commingling of the activities of commercial and investment banks. The promised benefits of the repeal of Glass-Steagall proved illusory and the costs proved greater than even critics of the repeal imagined. The problems are especially acute with the too-big-to-fail banks.

The imperative of reinstating the Glass-Steagall Act quickly is suggested by recent behavior of some investment banks, for whom trading has once again proved to be a major source of profits.”

 

The Dodd-Frank Bill, passed in 2010 in response to the financial crisis, is a more limited piece of legislation that attempts to limit “too big to fail” institutions from engaging in risky speculative behavior – but Governor Romney and many Republicans are calling for its repeal.

 

 

 

Background Articles:

 

The Banking Act of 1933, full text:
http://archive.org/details/FullTextTheGlass-steagallActA.k.a.TheBankingActOf1933


Bringing Back Glass-Steagall Would Rebuild Shattered Confidence in Wall Street,” Sy Harding, Forbes, May 21, 2012, http://www.forbes.com/sites/greatspeculations/2012/05/21/bringing-back-glass-steagall-would-rebuild-shattered-confidence-in-wall-street/

 

Weill Calls for Splitting Up Big Banks,” NYT Dealbook, July 25, 2012,

http://dealbook.nytimes.com/2012/07/25/weill-calls-for-splitting-up-big-banks/


Joseph Stiglitz: Why We Have to Change Capitalism,” The Telegraph, January 23, 2010, http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7061058/Joseph-Stiglitz-Why-we-have-to-change-capitalism.html




Title
Proposals
President's Initative
Issues
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