Robert Reich on Glass-Steagall and Public Morality

[portlander23]

A Crisis of Public Morality, Not Private Morality

In the 1990s it brought a speculative binge culminating in the bursting of the dotcom bubble. At the urging of Wall Street, Bill Clinton repealed the Glass-Steagall Act, which had separated investment from commercial banking.

In 2001 and 2002 it produced Enron and the corporate looting scandals, revealing not only the dark side of some of the most admired companies in America but also the complicity of Wall Street, many of whose traders were actively involved.

The Street's subsequent gambling in derivatives and risky mortgages resulted in the crash of 2008, and a massive taxpayer-financed bailout.

The Dodd-Frank Act attempted to rein in the Street but Wall Street lobbyists have done everything possible to eviscerate it. Republicans haven't even appropriated sufficient money to enforce it.

The final blow to public morality came when a majority of the Supreme Court decided corporations and wealthy individuals have a right under the First Amendment to spend whatever they wish on elections.

Public morality can't be legislated but it can be encouraged.

Glass-Steagall must be resurrected. Big banks have to be broken up.

Financial adviser: Clinton won't push Glass-Steagall bank bill

Liberals frequently argue that the Glass-Steagall Act, whose repeal was signed into law by President Bill Clinton, would have helped minimize the damage of the last financial crisis. But Blinder, who worked in the Clinton White House as well, said that is not in the cards for Hillary Clinton.

“You’re not going to see Glass-Steagall,” he said, adding that he had spoken directly to Clinton about the issue.

[Skwmom]

1. Reich is always a good read. n/t