Can Sen. Warren Block Best Big Banks From Launching Depression?
ell the good guys have come to town. Sen. Elizabeth Warren (D-Mass.) has enlisted Sen. John McCain (R-Ariz.), and they are after ?too big to fail? banks. Finally! Someone is fighting the humongous banks that sit there sucking up the profits like cane toads ? the most monstrous toads of all.
Sec. Paulson Screwed Us
?We?re too big to fail!? the banks cried as President George W. Bush?s last days counted down. Henry Paulson, Bush’s U.S. Secretary of the Treasury, rushed in with his outrageously brief, one-page request to bail out the banks. I was embarrassed for him, because he clearly was not shamed by his own lack of professionalism.
The banks knew that the housing loans they bundled and resold as investments would be filled with a sizable number of loan defaults, much like Swiss cheese. They caused the Great Recession, and they are up to their old tricks again.
What Is Glass-Steagall?
Back to Warren and McCain, the senators in the white hats have joined hands across the aisle to reintroduce legislation calling for the Glass-Steagall Act restoration!
After the stock market collapsed in 1929, Glass-Steagall passed to break up big banks. It sliced the commercial banking with checking and savings accounts away from the high-risk activities banks like to play. It protected us.
We have needed Glass-Steagall for decades. So co-sponsors Sen. Angus King (I-Maine) and Sen. Maria Cantwell (D-Wash.) joined?Warren and McCain in a statement:
?Legislation would have the effect of making ?too big to fail? banks smaller, minimizing the recurrence of a government bailout.?
Supposed Best Big Banks
?Despite the progress we?ve made since 2008, the biggest banks continue to threaten our economy. 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.?
McCain?believes that Congress? repeal of Glass-Steagall brought about a, ?culture of dangerous greed and excessive risk-taking,? for banking. He said,
?Big Wall Street institutions should be free to engage in transactions with significant risk, but not with federally insured deposits.?
The Great Recession – Again!
I blame the Great Recession on the repeal of Glass-Steagall during the Clinton era. Clinton people disagree, blaming the shaky economy on banks? risky lending and problems in housing.
This is the second time that Congress has tried to get Glass-Steagall back. The first time it fell with a resounding thud on the floor. Let’s hope that Warren and McCain have the strength to pull off this much-needed achievement.