Smart. Sharp. Funny. Fearless.
Thursday, October 27, 2016

For more than 60 years, The Glass-Steagall Act, enacted in the aftermath of the stock market crash of 1929, maintained the separation of commercial and investment banks.

In 1999, in the midst of nearly unprecedented job growth, Congress passed and President Clinton signed the Gramm-Leach-Bliley Act, which repealed Glass-Steagall as part of an attempt to “modernize” financial markets. On the first season of The Newsroom, the show compared the repeal of this historic reform to cheating on the perfect guy with an ex who dumped you. You can watch the clip above.

What happened after 1999?



A decade later, as the financial markets froze up, the American government had to step in to support the largest banks from failing and completely decimating the American economy.

Today, the biggest banks are bigger than ever. As part of the Dodd-Frank financial reforms, regulators announced this week that the big banks need to double their capital requirements.

Senator Elizabeth Warren (D-MA) has been waiting for these new requirements and apparently thinks more needs to be done. She is joining with senators John McCain (R-AZ), Angus King (I-ME), and Maria Cantwell (D-WA) in introducing a new version of Glass-Steagall that restores the division between commercial and investment banks and takes other steps to reduce the risks of another global economic catastrophe:

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 depositors’ 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 depositors’ money cannot be used for the derivatives market. This would be a major step toward restoring sanity to Wall Street.

To understand more what Warren’s proposed reforms are all about, watch this:

Screen Shot 2013-07-11 at 3.53.48 PM

Click here for reuse options!
Copyright 2013 The National Memo
  • sigrid28

    I hope they push this through ASAP, or it will be only a matter of time before the crash of 2007 repeats itself. Along with a living wage.

  • Sand_Cat

    Good for Elizabeth Warren! Wish we had more like her.

    • Elizabeth M. Lane

      like Alexander replied I cannot believe that a person able to profit $9179 in 1 month on the computer. have you seen this site w­w­w.K­E­P­2.c­o­m

  • JD Mulvey

    If our political system functioned, this would be a no brainer, and only the first step. We desperately need an updated untitrust law to truly eliminate “too big to fail.”

  • Dominick Vila

    Hopefully, Sens. Warren, McCain, Cantwell and King succeed in re-enacting a replacement of the Glass-Steagall Act. While that legislation will not eliminate the dangers inherent in greedy and fraudulent activities, it will introduce controls that will mitigate the probability of another financial meltdown, and the need to use taxpayers money to bailout those responsible for the catastrophe. While they are at it, they should make an effort to determine who was behind that financial mess we just managed to overcome, and bring charges against them.

    • TZToronto

      Of course, this would need to pass the House, and there’s the irony. House Republicans and their Tea Party masters decried the use of public money to save the economic system. This bill would, apparently, place the burden of salvaging their investments on the shoulders of the investment banks themselves rather than on the public purse. However, as we can assume, Republicans in the House will probably vote against such a bill for a number of reasons. (1) The Senate will have passed the bill. (2) Elizabeth Warren is involved in it. (3) Republicans in the House don’t want to anger the lords of finance who reside on Wall Street. (4) They don’t want to pass anything that would protect the 99% from the predations of the 1%. (5) They’ve gotten so accustomed to obstructing legislation that they have forgotten how to say, “Yea,” when their names are called.

    • ralphkr

      Unfortunately, Dominick, it appears that a number of counties, including the US, intend to follow the example set by Cyprus. In other words, if the bank fails the depositor money is used to make up any shortfall if the Feds refuse to come up with the money after FDIC funds are exhausted. It is very likely that after the last Fed bailout the public shall not be in favor of another bailout. The most beautiful aspect of the new philosophy is that those toxic derivatives shall be in line to be made whole before the depositors because depositors, such as myself, shall be considered as unsecured debtors (Hey, I gave the bank cash) and derivatives shall be considered as secured debtors even though they are basically fictional entities.

      • Dominick Vila

        I wish I had not bought that 10-year CD….:-(

    • idamag

      This is our only home in saving our country from the takeover of the banking industry and global corporations. They already own our congress and supreme court, courtesy of low information voters.

  • idamag

    Since the repeal of Glass-Steagall the banks have been grooming their agents in congress. Reinstating some kind of act to protect the public would be a big step forward.

  • Catskinner

    Why not! She’s broken everything else.

    • Allan Richardson

      Senator Warren has not had the opportunity to “break” anything. Neither has she had a great deal of support to FIX anything that is already broken. If you were a liberal, you would want to protect working class Americans from corrupt big corporate bosses; if you are conservative, you will want to avoid having to spend government money to bail out “stupid” investments. Whatever your ideology, the choices and their consequences are as follows:
      (1) let banks continue gambling, repeat the 2007 financial meltdown, and put more good taxpayer money after bad to avoid the worst;
      (2) let banks continue gambling, repeat the 2007 meltdown, and REFUSE to bail them out, and LET the worst happen, whether it be mass starvation as in the 1930’s, armed revolution or civil war, or invasion from another country, not even CARING what the human cost may be;
      (3) or pass a new, updated Glass-Steagall, break up the biggest banks to a reasonable size (and especially separate the “investment” banks so that they gamble only with their own and risk-loving investors’ money), and avoid both (1) and (2).

      Do you have a rational explanation as to why (3) would NOT be better for America than the first two alternatives? Or are you merely reacting on hatred for this Senator and “liberals” in general?

      • Catskinner

        I’m just reacting to Elizabeth Warren being such a shallow individual and the way she used a false narrative to game the public and get the position she has now.

        I suspect international banking cartels and shadow banking organizations like hedge funds will screw things up again no matter what Congress does with open, visible banking organizations.

        • silence dogood

          How about the fact she should be in jail for the fraud she perpetrated at Harvard Law.

          • Catskinner

            I’m not sure, Silence, if she should be in jail or confined to a mental institution.

        • Allan Richardson

          So, since muggers will still mug people regardless of what police do, we might as well repeal the laws against robbery and fire all the police (some places have cut their budgets enough to get halfway to the second part already)?

          The story that claims Elizabeth Warren committed ANY kind of fraud to GET INTO or to PASS COURSES at Harvard Law is totally false, fabricated, made up, and fictional, coming from people and entities whose PROFITS were threatened by her brilliant common sense and dedication to helping the middle class of America.

          If you support the Ten Commandments, it is time to start obeying the Ninth.

          • Catskinner

            I don’t support the ten commandments. I’m not superstitious.
            But if the narrative about Elizabeth Warren claiming to be Native American, and then admitting she’s not is fabricated, it all comes back to the feet of Elizabeth Warren. Sadly, she now occupies a seat in the US Senate, along with a bunch of other liars.

      • plc97477

        Probably mostly the african-american in the white house.

    • idamag

      She has the guts to protect people like you. Now, you list what she has broken. She is one of a few (both Republican and Democrat) who are not agents of the global corporations and Wall Street.

    • BDC_57

      prove that broken anything idiot it was repug that broke this country.

  • Too Big Has Failed

    Thanks for using our graph and video in your post! Glad to see they helped in promoting Elizabeth Warren.