The Phaserl


Verdict Is In: “The Banking Lobby Is Simply Too Strong To Allow It To Happen”

by Wolf Richter, Testosterone

“A culture of dangerous greed and excessive risk-taking has taken root in the banking world” since the repeal of the Glass-Steagall Act in 1999, said Senator John McCain last week when he supported Senator Elizabeth Warren in pitching legislation they’d baptized the “21st Century Glass-Steagall Act.” Senator Warren told Wall Street, where failure has been rewarded with bailouts and record bonuses, that “Banking should be boring.”

Wall Street must have gotten the willies. But it was a quixotic moment for two senators from the opposite sides of the aisle to stand up to the banking lobby.

“Big Wall Street institutions should be free to engage in transactions with significant risk,” Senator McCain explained – such as “investment banking, insurance, swaps dealing, and hedge fund activities,” Senator Warren clarified – “but not with federally insured deposits.” While the legislation “would not end Too-Big-to-Fail,” he said, “it would rebuild the wall between commercial and investment banking that was in place for over 60 years, restore confidence in the system, and reduce risk for the American taxpayer.”

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