This election cycle has reinforced long-held beliefs by many that the nation’s biggest banks need to be broken up. In 2008, American taxpayers bailed out mega-banks after their reckless and destructive behavior and since then Congress has fought about the best way to regulate the banks to ensure that such events will never happen again. The Dodd-Frank Wall Street Reform Act was introduced to protect consumers in numerous ways, and included several provisions that would reinstate Glass-Steagall, a 1933 bill that separated commercial and investment banking. These policies would help halt some of the risky gambling in big institutions like JPMorgan, Citibank, and Bank of America, but the bill doesn’t go far enough to protect American taxpayers from another crisis.
That’s why Public Citizen continues to support the 21st Century Glass-Steagall Act, which would make banks smaller, simpler, and safer.
As a part of the Take on Wall Street campaign, we are calling on Congress to make five policy changes that will help rein in some of the worst of Wall Street’s greed and excesses. One such policy change is the 21st Century Glass-Steagall Act which would ensure that the big banks are no longer too big to fail.
What is the 21st Century Glass-Steagall Act?
This act, reintroduced by U.S. Sens. Elizabeth Warren (D-Mass.), John McCain (R-Ariz.), Angus King (I-Maine) and Maria Cantwell (D-Wash.), would recreate and update the division between Federal Deposit Insurance Corporation (FDIC) insured commercial banks and investment banks. Breaking up the big banks is not enough to prevent another financial crisis, and Glass-Steagall would stop the banks’ reckless gambling with taxpayer money and renew their focus on lending to everyday Americans.
How will it do this?
A modern Glass-Steagall would make banks simpler to manage by restricting their activities to conventional banking, and would drive forward competition for smaller banks to compete against more well-known entities. It would also allow for protection against fluctuations on Wall Street, making the financial sector more resilient.
Will Glass-Steagall be effective in today’s market?
The 21st Century Glass-Steagall Act combines the ideals of the Banking Act of 1933 with an understanding of our current financial reality. Senators Warren and McCain have updated the language to directly regulate the markets and practices that lead to the financial crisis in 2008, such as derivatives and securitization.
What can I do?
Take action at TakeOnWallSt.com to support the 21st Century Glass-Steagall Act. There, you’ll be able to sign a petition to tell Congress to reform Wall Street and find a printable one pager on Glass-Steagall.
We hope that you’ll join with Public Citizen and our partners in the next phase of Wall Street reform!
This post was written by Amanda Bragg, a Public Citizen intern.