Return of Glass-Steagall is Proposed!
At a 10 AM press conference this morning, Senators John McCain (R-AZ) and Maria Cantwell (D-WA) will introduce the Banking Integrity Act to reinstate the separation between banking and investment activities that existed from 1933 until it was repealed by the Gramm-Leach-Bliley Act of 1999. The idea is to reduce risk of large financial institutions by separating investment activities from other banking. The problem with that is that it would put U.S. banks at a competitive disadvantage with their foreign competitors, so alternatives should be considered. Looking back on it, Gramm-Leach-Bliley was a key mistake that led directly to the 2008 financial crisis. However, the Senate seems unlikely to pass any financial reforms before the 2010 election. Allowing this financial crisis to pass without rewriting of the rules to prevent it from happening again would be a crime.
John Allison, avowed Libertarian, agrees: break up the banks
See his comments here:
http://bigthink.com/series/what-went-wrong?selected=building-banks-for-t...
All reasonable minds agree
All reasonable minds agree that this separation is badly needed. And all goverments use the same bad excuses for not doing it.
It should not be too difficult to reach such an agreement within G6 or other civilised countries??
Looking back on it,
Looking back on it, Gramm-Leach-Bliley was a key mistake that led directly to the 2008 financial crisis
What? I have never heard an argument that actually explains how GLB caused it. Even Dean Baker doesn't believe that (though he thinks it was a bad idea anyway).