May 22, 2017
Public Citizen Hails House Introduction of Glass-Steagall Reform for Sensible Banking
Statement of Bartlett Naylor, Financial Policy Advocate, Public Citizen’s Congress Watch Division
Public Citizen applauds the U.S. House of Representatives introduction of the 21st Century Glass-Steagall Act, sponsored by U.S. Rep. Michael Capuano (D-Mass.) This sensible measure would break up the megabanks that have done so much harm in their current form. It also would separate commercial and investment banking, meaning that taxpayer-backed insurance for deposit funding could be used only for commercial and consumer lending instead of supporting high-risk speculation.
Main Street and major corporations thrived under the 1933 Glass-Steagall law. Repealing it proved a catastrophic mistake, evidenced by the 2008 Wall Street crash and Great Recession, where big banks ran amok with a shield of complexity and size. Since 2008, though, the megabanks have become even larger, and the threat of bank failures continues to loom. The biggest banks have proven unable to manage their operations within the law, as demonstrated by securitization fraud, bribery, market manipulation and more recently, fake account creation at Wells Fargo.
Americans deserve and – as polling shows – want strong Wall Street regulation. Instead of gutting Wall Street rules and eviscerating the U.S. Consumer Financial Protection Bureau, as does the “Choice Act” (H.R. 10), which soon will receive a full House vote, representatives should be fulfilling the promise made in both parties’ political platforms. Both the GOP and Democratic platforms specifically call for a 21st Century Glass-Steagall Act.