2016 Postmortem
Related: About this forumRobert Reich: Why Hillary Clinton Is Wrong for Refusing To Resurrect Glass-Steagall
Found this while doing some research this morning and just wanted to share.
Just a snippet, see full article here http://inthesetimes.com/article/18493/hillary-clinton-bernie-sanders-glass-steagall-wall-street
Hillary Clinton wont propose reinstating a bank break-up law known as the Glass-Steagall Act at least according to Alan Blinder, an economist who has been advising Clintons campaign. Youre not going to see Glass-Steagall, Blinder said after her economic speech Monday in which she failed to mention it. Blinder said he had spoken to Clinton directly about Glass-Steagall.
This is a big mistake.
Its a mistake politically because people who believe Hillary Clinton is still too close to Wall Street will not be reassured by her position on Glass-Steagall. Many will recall that her husband led the way to repealing Glass Steagall in 1999 at the request of the big Wall Street banks.
Its a big mistake economically because the repeal of Glass-Steagall led directly to the 2008 Wall Street crash, and without it were in danger of another one.
As George Santayana famously quipped, those who cannot remember the past are condemned to repeat it. In the roaring 2000s, just as in the Roaring Twenties, Americas big banks used insured deposits to underwrite their gambling in private securities, and then dump the securities on their customers.
It ended badly.
This is precisely what the Glass-Steagall Act was designed to prevent and did prevent for more than six decades.
Hillary Clinton, of all people, should remember.
Kelvin Mace
(17,469 posts)WillyT
(72,631 posts)JayhawkSD
(3,163 posts)Don't get me wrong, Glass-Stegall was a useful law, which needs to be reinstated, but...
The "a bank break-up law known as the Glass-Steagall Act" is a bit of a misrepresentation. The law prevented deposit banks from investing in financial markets of any description. It did not "break up" any banks and its reinstatement would not do so now. Some banks would have to separate their operations but, even under the old Glass-Stegall, they could still have common ownership and they would not have to become any smaller. Glass-Stegall had nothing to do with the size of banks.
It is also inaccurate to say that "the repeal of Glass-Steagall led directly to the 2008 Wall Street crash," because most of the "too big to fail" banks that were bailed out were almost entirely non-deposit investment banks like Lehman and Goldman Sachs.
It's also completely inaccurate to say that "Americas big banks used insured deposits to underwrite their gambling in private securities, and then dump the securities on their customers." They made their own investments in high-risk investments, but if they had, as Reich says, "dumped those risks on customers" they would not have been at risk of failure when the investment crashed, their customers would have been. They were, in fact, holding what the government later called "toxic assets" on their own books because they had bought them as investments, intending to make profit for themselves as their value increased.
Scuba
(53,475 posts)But Hillary's friends at the banks don't want GS to be revived, so she won't do it.