Why Bernie’s Right About Glass-Steagall

[KamaAina]

http://billmoyers.com/story/why-bernies-right-about-glass-steagall/

Both Hillary Clinton and Bernie Sanders are talking tough about Wall Street reform. But only Bernie Sanders is advocating a reprise of the 1933 Glass-Steagall Act, specifically that section of the Depression-era act that had prohibited commercial banks and investment banks from operating under the same roof. Sanders believes that the repeal of Glass-Steagall in 1999 led to the formation of banks that became “too big to fail,” contributed to the financial crisis in 2008 — and will lead to another crisis without corrective legislation.

Most observers think Sanders is on a quixotic quest and, with Wall Street’s political power, the chances of any revival of Glass-Steagall are, like his election to the presidency, slim. Yet Sanders has a strong argument, one that can be effectively made using Citigroup, the two-century old bank that, along with other Wall Street banks, has a history of wreaking havoc on itself and the economy when it mixes commercial banking with investment banking....

With a more watchful regulatory environment and the reforms in place following the passage of the Dodd-Frank Act in 2010, Citigroup and the other Wall Street banks have been behaving much better. But commercial banking and investment banking remain very different cultures and letting them continue to operate under the same management represents a triumph of hope over experience. The next crisis will not likely involve bank financing of investment pools, or making undo amounts of margin finance available to brokers, or making high leverage loans to finance equity investments, or originating, packaging, and selling low-quality mortgage loans. And it may not involve Citigroup. But, absent a new version of Glass-Steagall, there will very likely be something just as calamitous. As the quip attributed to Mark Twain goes, history doesn’t repeat itself, but it rhymes.

Bernie’s probably right on this one. Even Sandy Weill — who once was proud to be referred to on Wall Street as the “Shatterer of Glass-Steagall” — now seems to agree. In a 2012 interview on CNBC he said, “What we should probably do is go and split up investment banking from banking. Have the banks do something that’s not going to risk the taxpayer dollars, that’s not going to be too big to fail.”

[daleanime]

1. K&R.....

[rhett o rick]

2. This issue isn't real complicated as the Clinton supporters would like us to believe.

Glass-Steagall was passed for a good reason. Those that like to gamble with investments shouldn't be allowed to gamble with people's deposits unless they so choose. The banks wanted to repeal Glass-Steagall for a reason. Why? Because they knew that they could gamble with depositors money and if they failed, the would get us to bail them out. Clinton would have us believe that the repeal didn't cause any harm, that it is a coincidence that the banks gambled more than they had and we, not Clinton, were forced to bail them out. The banks made trillions from their failures. So why wont they do it all again?