A bipartisan bill called the Return to Prudent Banking Act has been introduced in Congress to reinstate crucial consumer protections against predatory banking practices in place until 1999 when congress and then-President Bill Clinton repealed the Glass-Steagall act, a depression-era law that required separation between commercial and investment banking.
The legislation has 26 Republican and Democrat co-sponsors in the House of Representatives, including Democrat Tulsi Gabbard of Hawaii, Republican Walter B. Jones of North Carolina, and Democrat Marcy Kaptur of Ohio. Tulsi Gabbard explains the reasoning behind her support for the Return to Prudent Banking Act on her official congressional web page.
“From the Great Depression through the turn of the 21st Century, Glass-Steagall helped keep our economy safe,” Gabbard says. Repealing it allowed too-big-to-fail banks to gamble with the savings and livelihoods of the American people, with devastating, irrevocable consequences. Hawaii, along with communities across the country, paid the price in 2008 with the worst financial crisis since the Great Depression. Today, the banks that were ‘too big to fail’ in 2008 are even bigger and more powerful now. We must reinstate Glass-Steagall and create a financial system that works for every American—not just Wall Street banks.”
Gabbard also included a quote from Republican Congressman Walter B. Jones of North Carolina on her page.
“Wall Street banks should not be allowed to use taxpayer-insured consumer deposits to gamble in the markets and then get taxpayer bailouts for failed decisions,” Congressman Jones said. “It’s time to put American taxpayers and depositors first. It’s time to pass the Return to Prudent Banking Act and reinstate Glass-Steagall.”
Due to bipartisan support and comments made by President Donald Trump during his campaign, there is significant chance that the Return to Prudent Banking Act could pass both houses of Congress and be signed into law. According to Reuters, in October, Donald Trump called for a 21st-century Glass-Steagall banking law to reign in destructive lending and Wall Street speculation practices of the major banks that led to the financial collapse of 2008.
At that time, the banks were deemed “too big to fail” and required a bailout from the government because the repeal of Glass-Steagall in 1999 allowed the banks to gamble on Wall Street using the deposits of consumers. This created massive banking institutions that could own investment banks, commercial banks, and insurance firms. It also created a situation where if these companies were allowed to fail due to mismanagement, the results could have had disastrous for the economy as a whole.
The Return to Prudent Banking Act is an effort to prevent this situation from arising again. Representative Marcy Kaptur of Ohio sees the bill as a necessary step in preventing a return of conditions that led to the banking collapse of 2008, according to Cleveland.com.
“The 2008 crash nearly took down our entire economy and led to the great recession which wiped out average Americans’ income. But now, Democrats and Republicans have memorialized support for Glass-Steagall in their respective political platforms. Even President Trump has declared his support for a new Glass-Steagall law,” Congresswoman Kaptur said. “That is why we are here, to build on the momentum and the movement to reinstate Glass-Stegall.”
The Return to Prudent Banking Act has 26 co-sponsors in Congress from both parties, and it is endorsed by Ralph Nader’s consumer advocacy group, Public Citizen, as well as the AFL-CIO. Following President Trump’s call during his campaign to reinstate Glass-Steagall protections against destructive banking practices, it will be interesting to see if both parties can manage to work together in an effort to reign in the excesses of the large banks and help ensure a safe economy for the country.
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