This is a follow-up to the banking industry debate question last night. Sanders supports Glass-Steagall but Clinton supports some kind of alternative tax. There seems to be bipartisan support and opposition which is interesting. See the article for those details.
Don't know much about Glass-Steagall itself so I went and found this nerdwallet blog post. Here is the short, short version. Full post at link:
The Glass-Steagall Act, whose partial repeal in 1999 [LS note: when Bill Clinton was POTUS] has been blamed by many for the financial crisis of 2008-09, imposed on corporations a regulatory separation between traditional banking and higher-risk investing activities.
How we got here
Glass-Steagall and the Banking Act of 1933: The Glass-Steagall Act is actually a set of provisions included in the broader Banking Act of 1933, a response to the bank failures of the Great Depression. The Banking Act created the FDIC to insure consumers’ deposits with commercial banks and included the Glass-Steagall provisions to reduce the risk of providing such insurance. Most critically, Glass-Steagall made it illegal for a bank that held FDIC-insured deposits to invest in anything other than government bonds and similarly low-risk vehicles.
The partial repeal of Glass-Steagall and the financial crisis: After decades of lobbying and proposed legislation, some of the Glass-Steagall provisions were repealed in 1999, when President Bill Clinton signed the Gramm-Leach-Bliley Act. Glass-Steagall’s opponents largely objected to what they perceived as over-regulation by the government of the activities of private industry.
Many believe that Glass-Steagall’s partial repeal contributed heavily to the 2008-09 financial crisis, alongside earlier weakening of the act’s effects through various government actions. Even John S. Reed and Sandy Weill, the former co-chairs of Citigroup — created in 1998 as the acquisition of an investment bank, Salomon Smith Barney, by a commercial bank, Citibank — have both said, in effect, that Glass-Steagall protected the American economy.
Others, including President Clinton, have argued that Glass-Steagall would have done nothing to prevent the financial crisis.
Post by cookiemdough on Oct 15, 2015 5:54:37 GMT -5
It is too late to reinstate Glass-Steagall. I was actually confused by OMalleys position. It is one thing to criticize those responsible for the repeal however his argument in the debate was to put it back in place. It seems impossible.
Post by WanderingWinoZ on Oct 15, 2015 5:59:46 GMT -5
So, is this what basically allowed the regular banks to merge with investment banks to merge with insurance to merge with every other financial product out there? I feel like the consolidation of these mega businesses was part of the issue (too big) and their internal conflicts of interest (basically encouraging people to invest in their own products, etc) were parts of the problem.