Scared Monkeys Discussion Forum

Senate Democrats' Financial Reform Bill Keeps Wall Street Happy

The Senate financial reform bill is good, but not good enough. It does create several layers of consumer protections. But it does not reinstate the protections of the Glass-Steagall law. That post-Depression law prohibited commercial banks from investing in risky stocks and later derivatives. Not too long in historical terms, after that prohibition was lifted in the 1990s, the Great Depression was replaced by the Great Recession. Washington Democratic Sen. Maria Cantwell fought long and hard to reinstate Glass-Steagall but did not succeed, not at least in the version of financial reform approved by the Senate early this morning. [See which industries donated the most to Cantwell.] According to the Financial Times:

    Sen. Cantell opposed cloture on the grounds that senators had not had a chance to vote on amendments that would ensure derivatives were forced to be traded through central clearing houses and reinstate Glass-Steagall, the Depression-era law that separated commercial banks from investment banks.

    The return of GlassSteagall would be a sweeping change in US finance, surpassing anything in the Senate regulation bill in terms of restrictions.