There Are Real Reasons to Bring Back Glass-Steagall

When both major parties endorsed restoring the Glass-Steagall Act in their campaign platforms last month, they reaffirmed the powerful hold that the Glass-Steagall principle of separating commercial and investment banking has on the public imagination.

Glass-Steagall has become politically popular for good reason. The public understands that reducing the size and (especially) the complexity of our major publicly supported banking institutions is crucial to a healthier financial system. Restoring some version of the Glass-Stegall firewall between commercial and investment banking is a direct and powerful means to that end. There’s also an understanding that the financial system was generally more stable during the 60 years in which Glass-Steagall was in force.

Unfortunately, much of the inside-the-beltway commentary on Glass-Steagall does not add depth and substance to the public debate and is often inappropriately dismissive and shallow. A number of respected experts on the banking system, such as Federal Deposit Insurance Corp. Vice Chairman Thomas Hoenig, are strong supporters of Glass-Steagall. But too many other commenters dismiss Glass-Steagall for reasons that are at best half-truths and at worst censor the robust debate that we need to have about our current system of universal banking.

Read on.

One response to “There Are Real Reasons to Bring Back Glass-Steagall

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