With Glass-Steagall Revival, A Call to Bust Up the Megabanks
Five years after financial collapse, says Sen. Warren, and biggest banks are now bigger than ever
US Sen. Elizabeth Warren (D-MA) and others on Thursday introduced a new bill that revives the call to bust up the nation's largest banks and financial institutions by once again demanding a separation between the traditional banking practices of savings and loans from the far riskier behavior taken on by large investment, complex trading, and hedge fund operations.
The legislation, called the 21st Century Glass-Steagall Act, is designed as the modern version of the Banking Act of 1933 (the original Glass-Steagall) whose repeal in 1999 many credit with ushering in the banking deregulations that spawned the housing crisis and financial collapse of 2008.
Despite repeated efforts to "break up the big banks" by public interest groups and some legislators, all of those efforts—despite the destructive recession, foreclosure crisis, and unemployment epidemic—have been thwarted by the politically powerful financial industry represented by Wall Street lobbyists and others.
"The four biggest banks are now 30% larger than they were just five years ago," said Sen. Warren, "and they have continued to engage in dangerous, high-risk practices that could once again put our economy at risk. The 21st Century Glass-Steagall Act will reestablish a wall between commercial and investment banking, make our financial system more stable and secure, and protect American families."
Reporting to the development, Huffington Post's Zach Carter comments:
The legislation is unlikely to be signed into law, but underscores a deepening rift between the House and Senate over financial accountability. While bipartisan coalitions in the House have been moving legislation to deregulate swaps -- the complex financial products at the heart of the 2008 banking collapse -- a host of Senate bills cracking down on Wall Street risk have garnered Democratic and GOP support.