Elizabeth Warren Introduces 21st Century Glass-Steagall Act [View all]

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At today’s Senate Banking Committee hearing, Elizabeth Warren introduced the 21st Century Glass-Steagall Act of 2013, co-sponsored by Senators McCain, Cantwell, and King. The bill mirrors the heart of the original 1933 law, which separated traditional banking activity (like checking and lending) from the riskier activity investment banking (like derivatives).

The original law was repealed in 1999 toward the end of the Clinton administration, though the law had been eroding for years leading up to 1999. This repeal was one of several laws passed during that era which allowed the big banks to transform into megabanks, in part creating our current “too big to fail” policy.






This new bill from Senator Warren aims to play a part in reversing this trend so the banks will be smaller. After all, the three biggest banks (Chase, Bank of America, and Citi) are all bloated conglomerate banks that have enormous traditional and investment subsidiaries, so these banks wouldn’t be able to continue as they’re currently instituted. They would be broken up into much smaller firms.

What’s more, the 21st Century Glass-Steagall Act of 2013 will make it so banks cannot gamble with derivatives using depositor’s money like they do today. Currently, anyone who has money at banks like Chase, Bank of America, or Citi is implicitly using that money to help these banks make amplified bets that have the potential to cause another global meltdown. Reintroducing Glass-Steagall will make it so depositor’s money cannot be used for the derivatives market. This would be a major step toward restoring sanity to Wall Street.

Rest at Too Big Has Failed.org