Do you believe the Glass-Steagall Act ought to be reinstated?
Yes (83%, 82 Votes)
No (17%, 17 Votes)
Total Voters: 99
If a Great White insisted he only ate seafood, would you throw your children in the water with him? Probably not, which is why we are scratching our heads at Sanford I. Weill’s recent statement on CNBC that the basic tenets of the Depression-era Glass-Steagall ActA section of the Banking Act of 1933 regulating the ability of commercial banks to speculate in financial markets with their depositors' money for their own profit. Repealed by the 1999 Gramm-Leach-Bliley Act and re-enacted in part by the Dodd-Frank Act. ought to be reinstituted.
Glass-Steagall was a key piece of financial reform in the wake of the stock market crash that precipitated the Great Depression. Prior to 1933, banks holding money from depositors (their fundamental role in our society) were allowed to use those deposits to speculate in financial markets for their own profit. In other words, financial institutions were getting rich by gambling with Joe Mainstreet’s paycheck.
After the U.S. economy fell to pieces beginning in 1929, citizens and regulators alike thought it prudent to limit the ability of banks to gamble with customer deposits. Thus Glass-Steagall was born. It functioned as the financial version of the separation of church and state for the following 30 to 40 years, depending on which economist you ask. After a prolonged period of sustained economic growth in the U.S., the hallowed separation of deposits from bets began to erode, all in the name of bigger, better and faster wealth creation. Of course, that wealth never seemed to make its way back to the depositors as interest paid on deposits have declined in an almost straight line since 1980, the turning point in this epic banking (de)regulation drama.
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