Municipal Government, National

Pass Glass Steagall

November 13, 2016
By Elaine Kamarck

Elaine Kamarck

Washington, DC – Pass Glass Steagall! a version of Glass-Steagall. Glass-Steagall is a depression-era law that separated commercial and investment banking activity.

It was effectively repealed in 1999, under President Bill Clinton and replaced by the Gramm Leach-Bilely Act. When the Great Recession hit in 2008 and revealed the casino-like operations of many on Wall Street, attention turned to the wisdom-or lack thereof-of repealing Glass-Steagall. Not surprisingly, it became a rallying cry on the left and on the right for those who thought Wall Street had become too powerful and too reckless.

A year ago, Hillary Clinton gave a very powerful economic speech in which she called for an end to “short-termism” on Wall Street and for tougher controls against big banks. But that aspect of the speech was largely ignored and given the fact that she represented New York State in the Senate and had many contributors from the world of finance, Bernie Sanders was able to make her out as a puppet of Wall Street. At that time she did not endorse reinstatement of Glass-Steagall, arguing that there were other ways to get to the same results. And there is a legitimate debate over the wisdom of reinstating Glass-Steagall instead of enforcing other rules on the books, such as those in the Dodd-Frank bill. Nonetheless, as the political year went on reinstatement of Glass-Steagall assumed a symbolic significance.

But by agreeing to place reinstatement of Glass-Steagall in the Democratic platform Hillary Clinton signaled that she too would support it. Of course, as they say, the devil is in the details. The Democratic platform calls for a wide variety of other financial regulation in addition to Glass-Steagall, while the Republican platform states that Dodd-Frank is “crushing small and community banks and other lenders,” and calls for abolishing the Consumer Financial Protection Bureau.

But by agreeing to place reinstatement of Glass-Steagall in the Democratic platform Hillary Clinton signaled that she too would support it. Of course, as they say, the devil is in the details. The Democratic platform calls for a wide variety of other financial regulation in addition to Glass-Steagall, while the Republican platform states that Dodd-Frank is “crushing small and community banks and other lenders,” and calls for abolishing the Consumer Financial Protection Bureau.

*** Elaine C. Kamarck is a Senior Fellow at the Brookings Institution and author of Primary Politics: Everything You Need to Know about How America Nominates Its Presidential Candidates.

November 12, 2016

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