WASHINGTON (AFP) – A bipartisan group of US senators introduced a “21st Century Glass Steagall Act” on Thursday aimed at rebuilding a wall separating traditional banks from riskier activities like investment banking.
Landmark legislation was introduced in the aftermath of the 1929 Wall Street crash as a way to insure savings and checking deposits and reduce the likelihood of future meltdowns, in part by separating such banking from riskier finance operations.
Deregulation prevailed in the early 1980s and the original Glass-Steagall Act was repealed altogether in 1999, a move some experts have blamed for the 2007-2008 financial crisis.
“Despite the progress we’ve made since 2008, the biggest banks continue to threaten the economy,” bill sponsor Senator Elizabeth Warren, a Democrat and a top financial watchdog in the US Senate, said in a statement.
“The 21st Century Glass-Steagall Act will reestablish a wall between commercial and investment banking, make our financial system more stable and secure, and protect American families.”
Democratic Senator Maria Cantwell and independent Senator Angus King are co-sponsors, but a key backer is Republican Senator John McCain, whose sponsorship could help draw support from his party.
But it is unclear whether the bill can gain traction in Congress where many Republicans oppose tighter restrictions on the financial sector.
Copyright 2013 The National Memo