House Discussing Glass-Steagall Revival, Hoyer Says

[babylonsister]

House Discussing Glass-Steagall Revival, Hoyer Says

By James Rowley and Christine Harper


Dec. 15 (Bloomberg) -- The U.S. House is considering reinstituting the Depression-era Glass-Steagall Act, which barred bank holding companies from owning other financial companies, Majority Leader Steny Hoyer said.

A renewal of the 1933 law “is certainly under discussion” by House members, Hoyer told reporters in Washington today. The Glass-Steagall law was repealed in 1999 to help pave the way for the formation of Citigroup Inc. by the $46 billion merger of Citicorp and Travelers Group Inc.

“As someone who voted to repeal Glass-Steagall, maybe that was a mistake,” said Hoyer, a Maryland Democrat.

Hoyer made the comments when asked whether Congress and President Barack Obama’s administration could do more to persuade banks to make more business loans and get credit flowing into the economy. Obama met yesterday with the chief executive officers of U.S. banks, urging them to lend more money.

The Glass-Steagall law barred banks that took deposits from underwriting securities. The 1999 law that repealed it enabled the creation of “financial holding companies” that combine banks with insurers or investment banks.

Enactment of that law has generated debate about whether it helped spawn reckless lending practices and financial speculation that led to the meltdown of credit markets last year and the $700 billion U.S. bailout of troubled banks, including Citigroup.

more...

http://www.bloomberg.com/apps/news?pid=20601087&sid=arMrSVjq4cts&pos=9

[OnceUponTimeOnTheNet]

1. I just read a letter by John Conyers about this.

On his website from last month:

This week marks an important anniversary that will go unnoticed in many corners. Ten years ago, a little known Depression-era law known as the Glass-Steagall Act was repealed. It passed with large margins in both houses of Congress and was signed by President Bill Clinton. On Wall Street, the titans of capitalism cheered while it went unnoticed by most Americans that an important guard against financial instability and conflict of interest had been wiped away.

The Glass-Steagall Act had a simple premise: America’s banking sectors and investment houses need to remain separate to prevent banks from gambling on the stock market with our savings. President Franklin Roosevelt knew that banks, like other institutions, could not be trusted to police themselves. After witnessing the widespread failure of financial institutions in the Great Depression, he recognized a firewall was needed between the casino on Wall Street and the private investment engines of Main Street.

more:
http://conyers.house.gov/index.cfm?FuseAction=News.PressReleases&ContentRecord_id=02f1c859-19b9-b4b1-121a-41ecbd07b085&Region_id=&Issue_id=

Rec to the thread.