21st Century Glass- Steagall Act Proposed by Senator tweeting that “Banks should be boring.”
She wants to force deposit-taking financial institutions out of the investment business.
The National Review reported:
Senators John McCain and Elizabeth Warren are giving it a shot. The Arizona Republican and Massachusetts Democrat last week unveiled their “21st-Century Glass-Steagall Act,” which would restore the barrier between commercial banking and investment banking first established by the Banking Act of 1933. That prohibition, known as the Glass-Steagall “wall” after congressional sponsors Senator Carter Glass of Virginia and Representative Henry Steagall of Alabama, was repealed by the Financial Services Modernization Act of 1999, legislation signed by President Bill Clinton.
The premise being that banks can be in the investment business but they won’t be able to be FDIC insured if they are.
Of course, when she was asked if this would end the “too big to fail” issue- she admitted that there is not much that can do that.
The investment bankers say that the Dodd-Frank regulations have pretty much taken care of investment banking issues. But that is their opinion. Dodd-Frank has done more to hurt buyers who want to buy houses and tougher and the Patriot Act makes it tougher for foreigners to buy real estate here. Many people don’t think that Dodd-Frank has stopped the “too big to fail” either.
Since 2010 when the Dodd- Frank bill was enacted-
“The four biggest banks are now 30% larger than they were just five years ago and they have continued to engage in dangerous, high-risk practices,” Warren said during a Senate Banking Committee hearing.
The lobbyists got a hold of the bill and it was so watered down by the time it was passed, that it is a “toothless” bill at the expense of Americans.
The problem with all of these bills, is that this happens time and time again. What starts off as sounding reasonable ends up being a pile of papers good only for the rubbish and that no one reads.
Sens. Sherrod Brown, D-Ohio and David Vitter, R-La., introduced a bill that would force “Too Big to Fail” institutions to hold more capital, which would reduce their leverage power and protect against significant losses. But again, what will end up happening?
Also, the Glass- Steagall act was from the 1930’s. Things are different now and when Glass-Steagall was the law of the land, we still had severe financial shocks like the savings and loan crisis, the Latin-American debt crisis, the collapse of the hedge fund Long-Term Capital and the 1987 stock-market crash.
As long as you have lobbyists paying all kinds of favors to politician and as long as you have politicians who accept those favors you will have laws with either no teeth or laws that hurt one sector in favor of another.
As long as you have cronyism: banks, corporations and big pharma sleeping in bed with the government you will not have any bills that favor the people of the United States of America.
Only when you truly have free market systems where failing is a part of business and is not bailed out, where free competition arises by consumers who make the decision to buy or not to buy and where the government takes its’ rightful place of protecting the rights of the “contract” and private property will this kind of behavior subside.
Katerina Gasset is the author of http://www.wellingtonfloridashortsales.com. Katerina Gasset is the homeschool mother of 9 children and wife to Nestor Gasset. Katerina Gasset is also a writer, author, speaker, Realtor®, SEO coach, blogging coach and business entrepreneur and consultant.