After the great stock market crash of 1929, Congress passed the Glass-Steagal Act which forbid banks from playing the stock market. FDIC deposit insurance had just been invented, and nobody wanted to see banks playing the market with tax payer guaranteed money.
Banks hated Glass Steagal, and they spend 50 years lobbying the Feds to repeal it. They finally succeeded under Clinton and starting in the 90's banks jumped back into the stock market. They made barrels of money out of the market, and lots of capital that should have been invested in economic expansion was frittered away playing the market.
Now after Great Depression 2.0, the Feds are pushing "The Volcker Rule." which is Glass-Steagal brought back to life. Banks may not play the stock market.
This time the proposed "rule" is 294 pages long, and they estimate it will take 6 million man hours on the part of banks to fill out the paper work. Each year.
Can you say "Welfare for lawyers"?
They could just re instate the Glass-Steagal act which worked fine for 50 years. But that would be to easy, and be a confession that repealing Glass-Steagal was a mistake.
By the way, our old buddies Barney Frank and Chris Dodd were cheerleaders in the repeal of Glass-Steagal 20 years ago.
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