Robert Reich: Why Hillary Clinton Is Wrong for Refusing To Resurrect Glass-Steagall

[JRLeft]

Resurrection of the Glass-Steagall Act has become an important policy difference between Hillary Clinton and Bernie Sanders.

BY ROBERT REICH

This post first appeared at RobertReich.org.

Hillary Clinton won’t propose reinstating a bank break-up law known as the Glass-Steagall Act – at least according to Alan Blinder, an economist who has been advising Clinton’s campaign. “You’re not going to see Glass-Steagall,” Blinder said after her economic speech Monday in which she failed to mention it. Blinder said he had spoken to Clinton directly about Glass-Steagall.

This is a big mistake. 

It’s a mistake politically because people who believe Hillary Clinton is still too close to Wall Street will not be reassured by her position on Glass-Steagall. Many will recall that her husband led the way to repealing Glass Steagall in 1999 at the request of the big Wall Street banks.

It’s a big mistake economically because the repeal of Glass-Steagall led directly to the 2008 Wall Street crash, and without it we’re in danger of another one.

Some background: During the Roaring Twenties, so much money could be made by speculating on shares of stock that several big Wall Street banks began selling stock along side their traditional banking services – taking in deposits and making loans.

Some banks went further, lending to pools of speculators that used the money to pump up share prices. The banks sold the shares to their customers, only to have the share prices collapse when the speculators dumped them. 

Read more at the link: http://inthesetimes.com/article/18493/hillary-clinton-bernie-sanders-glass-steagall-wall-street