With Dems and Republicans seemingly at a stalemate in Washington, D.C., it’s encouraging to see a bipartisan effort being proposed by Elizabeth Warren (D-Mass.) and John McCain (R-Ariz.), along with Maria Cantwell (D-Wash.) and Angus King (I-Maine), and for something the country really needs. They have proposed the “21st Century Glass-Steagall Act,” restoring some provisions that were stripped from the Banking Act of 1933 back in 1999.
The Depression-era Banking Act, the second of two Glass-Steagall acts, stopped the boom and bust cycle of major bank failures until Continental Illinois National Bank and Trust Company failed in 1984.
“This bill would rebuild the wall between commercial and investment banking that was successful for over 60 years and reduce risk for the American taxpayer,” McCain said as he introduced the new bill.
“Banking should be boring,” Warren told MSNBC’s “Morning Joe” last week. She sees it as a bill to protect consumers from Wall Street gamblers. It’s also been described as an attempt to break up the “too huge to fail” megabanks, and certainly an effort to prevent something like the financial crisis of 2008 from happening again.
This new bill is not a magic bullet, but one of multiple pieces of needed legislation. Another bipartisan bill has already had an effect, even though it did not come to a vote. Sherrod Brown (D-Ohio) and David Vitter (R-Lou.) proposed increasing the capital requirements on the biggest banks, so that when they gamble, they aren’t just gambling with taxpayer money. Salon writer David Dayden notes that banking regulators, led by the Federal Reserve, followed the lines of Brown-Vitter and increased the requirements for the top eight U.S. banks, although not to the extent of the proposed legislation.
The 21st Century Glass-Steagall Act has the benefit of being a bipartisan bill with star sponsors. Dayden writes, “Across the ideological spectrum, from the Tea Party to MoveOn, Americans want to stop forever the perverse situation where banks can rack up private profits but put losses on the taxpayer.”
The big banks are fighting this, as they did successfully in 2010 when McCain introduced a similar bill, but America needs this to help return some security, stability and accountability to Wall Street. Warren agrees that the chance of it passing is zero unless we fight for it.
We need to fight for this one.