Glass Steagall is the word, to smash the big banks. Obama administration wants to stop it, but now their former friend Elizabeth Warren is mobilizing to promote and pass Glass Steagall. This is beginning to get interesting.
In a posting May 23 on MarketWatch.com, "What Washington is eyeing after J.P. Morgan trade," author Robert D. Orol reports that Republicans might rally around Thomas Hoenig, former chairman of the Kansas City Fed and an advocate of Glass-Steagall, who in March became a Commissioner on the Board of the Federal Deposit Guarantee Corporation. Orol writes, "Another idea [for today's financial mess] that has some Congressional staffers and legislators talking is a concept put forward by former Kansas City Federal Reserve Bank President Thomas Hoenig that would bar big banks from broker-dealer activities or sponsoring hedge funds or buyout firms outright.
"The move wouldn't be a complete return to the Glass-Steagall Act — a law approved in 1933 and eliminated in 1999 that prohibited a commercial bank from investment-banking activities...." Orol observes that, "Jaret Seiberg, analyst at Guggenheim Securities LLC in Washington, said the Hoenig plan is getting considerable attention on Capitol Hill..."
And typical of local media coverage is this week's article in Minnesota, in the St. Cloud Times: "Our View: JP Morgan Loss Fuels Reform Calls." It states, "Another suggestion involves reinstating the Glass-Steagall Act, which came about in the Great Depression to stabilize banking but was repealed in the late 1990s to allow banks to expand and enter the securities industry. In other words, deregulation..."
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