A bipartisan group of senators led by Massachusetts freshman Democrat Elizabeth Warren introduced a bill Thursday to reinstate the Great Depression-era Glass-Steagall law that would separate commercial from investment banks.There have been some other attempts to try to ward off the dangers of Too Big to Fail (led by David Vitter and Sherrod Brown), but many of these efforts have not gained much legislative support.
Speaking at a Senate Banking Committee hearing on the implementation of the Dodd-Frank financial reform law, Warren said that the point of her bill was “keeping the gamblers out of our banks.” Sens. John McCain, R-Ariz., Maria Cantwell, D-Wash., and Angus King, I-Maine, are co-sponsoring the measure.
The new Glass-Steagall provision, intended to counter the threat of too-big-to-fail banks, would separate banks that offer savings and checking accounts to consumers from firms that engage in other, riskier financial services, such as investment banking and hedge fund management. The non-commercial banks would not be insured by the Federal Deposit Insurance Corporation.
I've written before about the possible benefit of taking on Too Big to Fail.
