July 15, 2013 § Leave a comment
What a sober, persuasive, prescient analysis of the new Glass-Steagall Act should be welcomed.
Originally posted on The Baseline Scenario:
By Simon Johnson
On Thursday of last week, four senators unveiled the 21st Century Glass-Steagall Act. The pushback from people representing the megabanks was immediate but also completely lame – the weakness of their arguments against the proposed legislation is a major reason to think that this reform idea will ultimately prevail.
The strangest argument against the Act is that it would not have prevented the financial crisis of 2007-08. This completely ignores the central role played by Citigroup.
It is always a mistake to suggest there is any panacea that would prevent crises – either in the past or in the future. And none of the senators – Maria Cantwell of Washington, Angus King of Maine, John McCain of Arizona, and Elizabeth Warren of Massachusetts – proposing the legislation have made such an argument. But banking crises can be more or less severe, depending on the nature of the…
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