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Monday, May 16, 2011

What Is The Glass-Steagall Act & Why Do The GOP Hate It?

Glass-Steagall Act » New Deal 2.0  <----- Thank You, You are AWESOME!!!!

Glass-Steagall Act

Monday, 05/4/2009 - 3:30 pm by Jason Selfe 
dictionary
[Note: updated on 2.16.2011]
What is the Glass-Steagall Act of 1933?
The Glass-Steagall Act was introduced during the Great Depression by former Treasury Secretary Sen. Carter Glass (D-VA) and Chairman of the House Banking and Currency Committee Rep. Henry B. Steagall (D-AL). As one of the first acts of FDR’s New Deal, the legislation segregated commercial banks from securities markets, established the Federal Deposit Insurance Corporation (FDIC) and enhanced the regulatory powers of the Federal Reserve over banks.
What’s the significance?
The stock market collapsed in 1929; customers rushed to withdraw their funds, and by 1933, roughly 9,000 banks in the United States had failed. The Glass-Steagall Act and the FDIC it created were attempts to restore public trust in the deposit system and stem the rush to withdraw. The act also recognized inherent risks in securities markets, making it impossible for banks to serve simultaneously as brokerages.
The act’s repeal in 1999 paved the way for bank investments in, among other things, mortgage-backed securities and collateralized debt obligations—the tipping points of the current meltdown. This has led some commentators, including James K. Galbraith, to argue that the repeal of Glass-Steagall helped fuel the financial crisis.
Who’s talking about it?
Marshall Auerback warns that FinReg simply keeps the post-Glass-Steagall status quo…Robert Reich thinks FinReg falls short for not reinstating Glass-Steagall…Bill Moyers and Michael Winship of Progressive Democrats of America question the honesty of Lawrence Summers as chief economic advisor and gatekeeper to President Obama, given his past connection to Wall Street’s fight against Glass-Steagall … Blogger William Kaufman looks at the bipartisan origins of Glass-Steagall’s repeal and its connection to the current financial crisis… Sen. Wayne Allard (R-CO), former ranking member on the senate Securities, Insurance, and Investment Subcommittee, still supports the repeal of Glass-Steagall, arguing that it was necessary for the United States to remain competitive in a global market…and Kevin Drum of Mother Jones wonders whether the failure of other financial institutions shows the Glass-Steagall repeal isn’t really to blame…Bill Black notes that Peter Wallison’s dissent on the FCIC’s findings noted only the repeal of Glass-Steagall as a regulation that was loosened, but there are so many more…Lyndon La Rouche thinks anyone who opposes reinstated the Act immediately is “criminally insane”.


1 comment:

jo said...

With the take down of Dominique Strauss-Kahn the next round of bailouts for the City of London & Wall St were halted giving us the historic opportunity to ram through Glass-Steagall (H.R. 1489) immediately. Mobilize like the future of the country depends on it, it does! http://larouchepac.com/node/18273