U.S. Rep. Jay Inslee (D-WA, 1)
In today’s Morning Fizz we took notice of Sen. Maria Cantwell’s legislation (co-sponsor Sen. John McCain) to separate commercial banks and investment banks.
This afternoon, U.S. Rep. Jay Inslee (D-WA) comes out in favor of the House version. He’s a co-sponsor with sponsor U.S. Rep. Maurice Hinchey (D-NY)
Rep. Inslee says:
“If we allow banks to become too big to fail, than we will have done little to succeed,” said Rep. Inslee. “When I voted against the repeal of Glass-Steagall in 1999, I did so because I feared that consolidation in the financial industry could wreck the economy. That fear was substantially realized and today we should adopt one principle – never again.”
We’ve linked Rep. Inslee’s press release below the fold.
Rep. Inslee’s press release:
Rep. Inslee Helps Lead Effort to Reinstate Glass-Steagall Act
Legislation would split megabanks and reinstitute wall separating investment and commercial banking
(Washington, DC) – This afternoon Congressman Jay Inslee joined with sponsor Maruice Hinchey (D-NY) to introduce legislation to reinstate portions of the Banking Act of 1933, known to most as the Glass-Steagall Act. The legislation would once again create a wall between investment and commercial banking thus protecting taxpayers. The legislation is also being co-sponsored by Reps. John Conyers (D-MI), Peter DeFazio (D-OR), Marcy Kaptur (D-OH), Jim McDermott (D-WA), and John Tierney (D-MA). The Glass-Steagall Act was overwritten in 1999 by the Gramm-Leach-Bliley Act.
“If we allow banks to become too big to fail, than we will have done little to succeed,” said Rep. Inslee. “When I voted against the repeal of Glass-Steagall in 1999, I did so because I feared that consolidation in the financial industry could wreck the economy. That fear was substantially realized and today we should adopt one principle – never again.”
Congressman Inslee first offered legislation to reintroduce Glass-Steagall in the House Energy and Commerce Committee on October 29th, which was subsequently adopted and offered as an amendment to the financial reform bill by Congressman Hinchey.
The legislation would take effect one year after passage, and would specifically prohibit banks from being affiliated with any corporation or similar organization that deals with stocks, bonds, or other securities. This year, just four financial institutions hold half the mortgages in the United States, issue nearly two-thirds of credit cards, and control about forty percent of all bank deposits. In addition, the face value of over-the-counter derivatives at commercial banks has grown to $290 trillion, ninety-five percent of which are held at five financial institutions.
In 1987, a Congressional Research Service (CRS) prepared a report which warned of the huge risk to taxpayers if Glass-Staegall was repealed noting, “Securities activities can be risky, leading to enormous losses. Such losses could threaten the integrity of deposits. In turn, the Government insures deposits and could be required to pay large sums if depository institutions were to collapse as the result of securities losses.”
