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July 07, 2015 at 11:02 AM
Sen. Elizabeth Warren, D-Mass., reintroduced Tuesday her 21st Century Glass-Steagall Act to rein in banks’ risky behaviors by reinstating certain Glass-Steagall Act protections that were repealed by the Gramm-Leach-Bliley Act.
The same day, a new poll conducted by Lake Research Partners found that voters still want tougher rules for Wall Street five years after the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed into law.
First introduced in the 113th Congress by Sens. Warren and John McCain, R-Ariz., the 21st Century Glass-Steagall Act would separate traditional banks that have savings and checking accounts and are insured by the Federal Deposit Insurance Corp. from “riskier financial institutions” that offer services such as investment banking, insurance, swaps dealing, and hedge fund and private equity activities.
The bill states that it would “clarify regulatory interpretations of banking law provisions that undermined the protections under the original Glass-Steagall” and would make “too-big-to-fail” institutions smaller and safer, minimizing the likelihood of a government bailout.
“Despite the progress we’ve made since 2008, the biggest banks continue to threaten our economy,” said Warren in a statement. “The biggest banks are collectively much larger than they were before the crisis, and they continue to engage in dangerous practices that could once again crash our economy.”
The 21st Century Glass-Steagall Act will “rebuild the wall between commercial and investment banking and make our financial system more stable and secure.”
McCain, who co-sponsored the bill again with Warren, noted in the statement that since core provisions of the Glass-Steagall Act were repealed in 1999, “shattering the wall dividing commercial banks and investment banks, a culture of dangerous greed and excessive risk-taking has taken root in the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.”
He added that “big Wall Street institutions should be free to engage in transactions with significant risk, but not with federally insured deposits.”
If enacted, the 21st Century Glass-Steagall Act would not end too-big-to-fail banks, McCain said, “but, 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.”
