April 9, 2019
Let’s Close the Bank Casinos
Statement of Bartlett Naylor, Financial Policy Advocate, Public Citizen’s Congress Watch Division
Note: Today, U.S. Rep. Marcy Kaptur (D-Ohio), reintroduced the Return to Prudent Banking Act. The bill restores the separation between commercial banking, such as mortgages and business loans, from higher risk investment banking, such as securities trading. This separation is known as the Glass-Steagall Act. Meanwhile, the U.S. House Financial Services Committee will hear from the CEOs of the largest banks at a hearing on April 10.
Public Citizen enthusiastically welcomes Kaptur’s much needed bill to restore prudence to the banking industry. After Congress repealed the ban on banks owning casino-like securities gambling operations, it took less than a decade for reckless conduct funded by government-backed deposits to crash the world economy.
It’s clear that fusing investment and commercial banking corrupted Wall Street’s culture, a point stressed by former Citigroup CEO John Reed. This hearing should examine how the massive misconduct in the 2008 crash, Wells Fargo’s innumerable misdeeds and weekly disclosures of transgressions by other megabanks, all stem from the toxic mix that Glass-Steagall prevented.