Glass-Steagall Act Would Be Revived In New Bill From Elizabeth Warren, Bipartisan Coalition
WASHINGTON — A bipartisan group of four senators that includes Elizabeth Warren (D-Mass.) and John McCain (R-Ariz.) introduced an updated version of the landmark Glass-Steagall Act on Thursday, aimed at reining in risk at America’s largest Wall Street banks.
The legislation is unlikely to be signed into law, but underscores a deepening rift between the House and Senate over financial accountability. While bipartisan coalitions in the House have been moving legislation to deregulate swaps — the complex financial products at the heart of the 2008 banking collapse — a host of Senate bills cracking down on Wall Street risk have garnered Democratic and GOP support.
The new bill, which is also cosponsored by Sens. Maria Cantwell (D-Wash.) and Angus King (I-Maine), would require banks that accept federally insured deposits to focus on traditional lending and would bar them from engaging in risky securities trading. The separation between lending and trading was originally imposed in 1933 by the Glass-Steagall Act. Cantwell and McCain previously introduced the plan as an amendment to the 2010 Dodd-Frank financial reform bill, but the largely symbolic bill was never approved. The legislation introduced today would also bar banks that accept insured deposits from dealing swaps or operating hedge funds and private equity enterprises.
“Since core provisions of the Glass-Steagall Act were repealed in 1999, shattering the wall dividing commercial banks and investment banks, a culture of dangerous greed and excessive risk-taking has taken root in the banking world,” McCain said in a written statement. “Big Wall Street institutions should be free to engage in transactions with significant risk, but not with federally insured deposits.”
Rest from The Huffington Post here…