Citizen dialog for transparent process by the Lowndes Area Knowledge Exchange
Reinstating Glass-Steagall
Reinstating Glass-Steagall appears to be a very popular possibility,
although all I can find is
an unscientific online poll (87% for).
You may wonder: what is Glass-Steagall?
“In 1933, Senator Carter Glass (D-Va.) and Congressman Henry Steagall
(D-Ala.) introduce the historic legislation that bears their name,
seeking to limit the conflicts of interest created when commercial
banks are permitted to underwrite stocks or bonds. In the early part
of the century, individual investors were seriously hurt by banks whose
overriding interest was promoting stocks of interest and benefit to the
banks, rather than to individual investors. The new law bans commercial
banks from underwriting securities, forcing banks to choose between being
a simple lender or an underwriter (brokerage). The act also establishes
the Federal Deposit Insurance Corporation (FDIC), insuring bank deposits,
and strengthens the Federal Reserve’s control over credit.”
66 years later, after numerous weakenings:
“Oct.-Nov. 1999 Congress passes Financial Services Modernization Act
After 12 attempts in 25 years, Congress finally repeals Glass-Steagall,
rewarding financial companies for more than 20 years and $300 million
worth of lobbying efforts. Supporters hail the change as the long-overdue
demise of a Depression-era relic.”
“In 1933, Senator Carter Glass (D-Va.) and Congressman Henry Steagall (D-Ala.) introduce the historic legislation that bears their name, seeking to limit the conflicts of interest created when commercial banks are permitted to underwrite stocks or bonds. In the early part of the century, individual investors were seriously hurt by banks whose overriding interest was promoting stocks of interest and benefit to the banks, rather than to individual investors. The new law bans commercial banks from underwriting securities, forcing banks to choose between being a simple lender or an underwriter (brokerage). The act also establishes the Federal Deposit Insurance Corporation (FDIC), insuring bank deposits, and strengthens the Federal Reserve’s control over credit.”