Obama Adminstration Wants to Protect us from the Large Banks

Hot off the press from the Wall Street Journal reportersDamian Paletta and JonathanWeisman report that President Barrack Obama will propose new regulations on banks that are too big to fail. The goal of these regulations would be that banks would have to put up barriers between divisions inside the banks. The goal of this is to make sure that money that is Federally insured by FDIC is not being used for speculative investments. This means though that there will be a separation from the bank that a citizen takes out a loan or deposits money, and from the bank that sells securities on the open market. For banks this is not a good item because a majority of the big banks made most of their profit from the speculative investment part and minor part from deposits and loans.

The idea of this plan comes from the Glass Steagull Act of 1933 which separated depository banks from investment banks. This was the law of the land until 1999 when Gramm-Leach-Bliley Act became into law. This took out the teeth of the Glass Steagull Act of 1933 and help caused the market meltdown in the last decade. The Gramm-Leach-Bliley Act of 1999 passed the full Senate with a 90-8 vote.

The Obama administration does not want to pass regulations to reenact Glass Steagull, but to set limits for banks to make sure they do not get too big to fail. This idea might find bipartisan support. A Bloomberg News article from Alison Vekshin on December 16, 2009 Arizona Republican John McCain and Washington Democrat Maria Cantwell wanted to reinstate Glass Steagull. President Obama is not the only one that wants bank reform.

Sam Brown winning the election in Massachusetts last night and the Democrats have lost their 60 seat majority in the Senate. The idea of passing healthcare reform is stalled and will not likely pass, but with the outcry of the American people for tougher reforms on the banking system allows politicians to gain political capital. Democrats and Republicans can work together on this in a bipartisan way to fix a system that failed the nation. We hope that politicians will do what is best for the country instead of political positioning.

Tighter reforms are needed on the banking system. They help our economy move forward and provide us with the capital needed to due business in the United States. We need to protect our banking system from excessive risk. It is important that our banks do not cause the nation harm by schemes that make them money, but hurt American People. Here at the Common Civic Good we support implementing ideas of Glass Steagull Act back into the legislation.

Like Always the links are at the bottom.

http://www.huffingtonpost.com/

http://online.wsj.com/article/SB10001424052748704320104575015910344117800.html

http://topics.nytimes.com/topics/reference/timestopics/subjects/g/glass_steagall_act_1933/index.html?offset=0&s=newest

http://www.bloomberg.com/apps/news?pid=20601103&sid=aQfRyxBZs5uc