Elizabeth Warren proposes smaller, safer bank bill

Fuzzy_

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Elizabeth Warren Introduces 21st Century Glass-Steagall Act

From the article:
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. This new bill mirrors the original 1933 Glass-Steagall Act, which separated traditional banking activity (like checking and lending) from the riskier activity investment banking (like derivatives).

The original law was repealed in 1999 by the Gramm-Leach-Bliley Act, though Glass-Steagall had been eroding for years leading up to that point. Gramm-Leach-Bliley, along with several laws passed during that era, allowed the big banks to transform into megabanks, creating “too big to fail.”
This bill will reverse the trend of bloated, centralized banking, breaking the Big Banks into smaller firms with more accountability. These firms won't be able to gamble with derivatives using your money -- they would have to gamble with their own money.

What'cha think?
 

Bardox

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There's going to be some major push back on this. A campaign can be won or lost depending on who the major banking firms support. Without access to depositor funds (aka our checking and savings accounts) some of the investment banks will not be able to sustain themselves. They will implode or be hacked up and devoured by the other banks.

All that being said... It's a good idea. Investment banks are the one's vulnerable to stockmarket trends. As long as Commercial banks are tied to them everyone's life savings is at risk. They need to be kept seperate to protect the populous from reckless banking practices.

In short, Bring back Glass-Steagall!!!
 

Fuzzy_

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Result of Glass-Steagall: 50 years of no market crashes.

Then, the deregulation began in 1980 and things went to pot. Here are some examples:

  • Deregulation measure:
    Depository Institutions Deregulation and Monetary Control Act of 1980
    Result:
    The S&L crisis
  • Deregulation measure:
    The Commodity Futures Modernization Act of 2000 (OTC derivatives trading)
    Result:
    The Long-term capital management crisis
  • Deregulation measure:
    SEC decreasing bank debt restrictions
    Result:
    The subprime mortgage crisis (2008 crash)

Financial deregulation has no proven relationship with faster economic growth. In fact, since deregulation became popular in the 80's, the average GDP growth in the West fell steadily -- unlike the phenomenal post-war prosperity that created the American Empire.

The Golden Age of Capitalism (1945-1973) was the IMF and Bretton Woods era of social democracy, keynseianism and the heaviest financial regulation in US history. This regulation worked by preventing predation and protecting consumers.

Libertarians, neoliberals and neoclassical economists will always argue that limiting the free market is "unnatural". As libertarians desperately try to rationalize the fact that deregulation is destroying the US' economy, they propose their classic slippery slope argument that "interventionism" leads to unintended consequences... or even tyranny.

In short, deregulation is destroying the US economy.
 

mallak

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Why isn't Obama cheerleading Warren's efforts on this? Is he just a marionette of the banking industry? Or is he just so obsessed with punishing Snowden that he can't focus on things that are actually important, like this?
 
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