Wall Street Bankers Declare War On Glass-Steagall Act

Wall Street have declared war against Congress for attempting to re-implement the Glass-Steagall Act, according to Bloomberg News last week.

 NEW YORK CITY, N.Y. — Wall Street have declared war against Congress for attempting to re-implement the Glass-Steagall Act, according to Bloomberg News last week.

But Wall Street bankers say the opposite.

“Congress is at war with Wall Street,” Lyle Gramley, a former board member of the Federal Reserve, told Bloomberg.

However, earlier this month, Sen. Chris Dodd tabled the bill that would return parts of the original Glass-Steagall Act because of lack of support in Congress.

According to House Rep. Maurice Hinchey though, not enough has been done to reign in Wall Street. He wrote in a recent column:

“Today, just four huge financial institutions hold half the mortgages in America, issue nearly two-thirds of credit cards, and control about 40 percent of all bank deposits in the U.S. In addition, the face value of over-the-counter derivatives at commercial banks has grown to $290 trillion, 95 percent of which are held at just five financial institutions. We cannot allow the security of the American economy to rest in the hands of so few institutions.”

The Act would separate investment banking services from commercial services, as it had from 1933 to when it was repealed in 1999.

In effect, the four “too-big-to-fail” banks would be broken up if Glass-Steagall became federal law again.

“The impact on Wall Street would be severe,” Wayne Abernathy, a vice president at the American Bankers Association, told Bloomberg.

H. Rodgin Cohen, a corporate lawyer who helped dismantle Glass-Steagall, told Bloomberg that say the Act’s re-introduction would do little to protect Americans from a financial disaster like last year’s.

Cohen suggested that federal regulators supervise the system better and strengthen capital requirements.