Is it possible that true financial reform might take place?
That the too big to fail banks might be broken up? That the era of endless taxpayer subsidy to banker speculation is coming to an end?
A Democrat and a Republican Senator, Maria Cantwell and John McCain, are trying to reinstate Glass-Steagall.
Over the past year, we’ve heard some chatter about bringing back the depression era legislation that kept commercial and investing banks separate — so when Wall Street goes bust, it does not freeze Main Street banks — but no one has put details on the table yet.
Cantwell has been aggressive on derivatives; Paul Volcker seems to be stepping up on this issue, so perhaps there is something actually occurring here. (Steny Hoyer in the House is also talking about bringing back Glass-Steagall).
Here are two recent articles:
“The U.S. House is considering reinstituting the Depression-era Glass-Steagall Act, which barred bank holding companies from owning other financial companies, Majority Leader Steny Hoyer said.
A renewal of the 1933 law “is certainly under discussion” by House members, Hoyer told reporters in Washington today. The Glass-Steagall law was repealed in 1999 to help pave the way for the formation of Citigroup Inc. by the $46 billion merger of Citicorp and Travelers Group.”
Cantwell/McCain: An Odd Post-Crash Couple (Newsweek)
“John McCain lost the 2008 presidential election because of the financial crisis—at least that’s what his chief strategist, Steve Schmidt, suggested. “We were three points ahead on Sept. 15 when the stock market crashed. And then the election was over,” Schmidt said in a postmortem earlier this year. McCain was tarred with the regulatory failures of the Bush years, and it didn’t help that he had been a longtime acolyte of the Senate’s dean of deregulation, Phil Gramm, who once derided Americans as “a nation of whiners.” McCain also seemed to have few new ideas of his own about how to address the financial panic.
More than a year after the election, the Arizona Republican is looking to repair that reputation by joining up with Democratic firebrand Maria Cantwell to propose something that will be anathema to both Wall Street and the Obama administration. According to two congressional sources, the two maverick senators want to reinstate Glass-Steagall Act, the Depression-era law that forced the separation of regular commercial banking from Wall Street investment banking. The senators’ proposal echoes a failed amendment introduced in the House last week by Rep. Maurice Hinchey of New York.”
Fascinting — and hopeful — developments . . .
Volcker: Reinstate Glass Steagall (September 24th, 2009)
Former Chair of Citigroup: Restore Glass-Steagall (October 27th, 2009)
Gramm: Glass Steagall Repeal Irrelevant (November 19th, 2009)