By Craig Wilson
This post Could Glass-Steagall Crown the Next King on Wall Street? appeared first on Daily Reckoning.
Trump’s economic reform policy could the next part of an “Art of the Deal” doctrine signaling that lawmakers are now wanting modern Glass-Steagall bank reform. That would mean a major shakeup on Wall Street, in markets and a new found king within the world of big finance.
Gary Cohn, chairman of the power heavy National Economic Council, privately told members of the Senate Banking Committee that he supports a policy to breakup the big banks.
Cohn, the former co-president and co-chief operating officer at Goldman Sachs, is seen by many to be the leading advocate in the White House to press for the revival of the Glass-Steagall Act.
During the 2016 election cycle the Republican party platform, which even then candidate-Trump championed, had identified that:
“We support reinstating the Glass-Steagall Act of 1933 which prohibits commercial banks from engaging in high-risk investment.
Sensible regulations can be compatible with a vibrant economy.”
The Glass-Steagall Act was a major part of legislation during the depression to try and correct the volatile risks posed by Wall Street and the financial system.
What the legislation did was place limits on investment banks and those financial institutions that were involved with brokerage firms which would also be responsible for underwriting (and in many cases dishing out stocks) with commercial banks that held FDIC insured funds.
Put simply, the legislation was a practical way of preventing dangerous speculation and mounting greed that would viciously blow up — all while putting Main Street America at risk.
The legislation was set in place to protect the U.S economy and its major banks for more than 65 years until its eventual repeal during the Clinton Administration in 1999.
It took less than a decade for the financial system to inflate enough with too big to fail institutions to bring the entire economy back to a near 1930’s-era crash.
By playing with FDIC insured funds as a “golden parachute” Wall Street financiers could entrust any losses taken to be bailed out with the taxpayer money.
This was not legislation for rules sake, but an act for the sake of Main Street America.
Since the massive financial crisis in 2008 and a series of taxpayer funded bank bailouts — inflated “too big to fail” institutions are now bigger and more dangerous than before.
As former Congressman and Reagan budget director David Stockman pressed in his case for Glass-Steagall legislation, “Wall Street is run by a generation that has been bailed-out too many times to count.”
“The big banks have been blatantly and egregiously coddled by perverse central bank theories and practices that have turned the nation’s capital and money markets into veritable gambling casinos.”
Glass-Steagall Could Make Goldman the King of Wall Street
It is no secret that the world of big finance rejects any signs of sweeping regulation in the market.
Just last week, JPMorgan’s Jamie Dimon released a report claiming that too big to fail had essentially been solved.
While this jaded thinking may be …read more
Source:: Daily Reckoning feed
The post Could Glass-Steagall Crown the Next King on Wall Street? appeared first on Junior Mining Analyst.