Reviving Glass-Steagall Is Bad Policy
This year, both political parties’ platforms include language with regard to the Glass-Steagall Act, the Depression-era law that prohibited commercial banks from participating in investment banking until it was repealed in 1999. Both parties now propose to reinstate Glass-Steagall – the Democrats call for “an updated and modernized version,” while the Republicans call for a verbatim reinstatement of the 1933 law. If any decency is to be gleaned from these proposals, at least the Democrats want to update the law before reinstating it. The problem is they’re both wrong. In this populist effort, the idea of breaking up big banks is good politics, but reviving Glass-Steagall is bad policy – and the two should not be confused.