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Health & Fitness

Cut the Risk of Another Bank Meltdown

How to Cut the Risk of Another Bank Meltdown

Gamblers on Wall Street should never be allowed to gamble with the taxpayers' money.  The current rules are too sweet for the Wall Street speculators:  If they bet right, they make huge profits.  If they bet wrong, the government bails them out.  I support Senator Elizabeth Warren's initiative to fix this problem by reinstating the Glass-Steagall Act.

On July 11 of this year, Elizabeth Warren, John McCain and two other U.S. Senators introduced the 21st Century Glass-Steagall Act of 2013, in an effort to reduce the risks of and damage from another financial system meltdown. This important piece of legislation  could help prevent job losses like those that resulted from the 2008 meltdown.

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Congress passed the Banking Act of 1933, commonly known as Glass-Steagall, in response to the financial crash of 1929 that caused the Great Depression. It required commercial banks whose deposits were insured by the federal government to use their funds only for relatively safe loans to businesses and consumers, banning the banks from making riskier investments.

Under the Act, higher-risk investments had to be made by separate investment banks that the federal government did not insure against losses. For decades Glass-Steagall helped keep our banking system stable, but banks were able to gradually weaken it, and Congress repealed the law entirely in 1999.

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"Since core provisions of the Glass-Steagall Act were repealed in 1999, shattering the wall dividing commercial banks and investment banks, a culture of dangerous greed and excessive risk-taking has taken root in the banking world," said Senator McCain.

"Despite the progress we've made since 2008, the biggest banks continue to threaten the economy," said Senator Warren.  "The four biggest banks are now 30% larger than they were just five years ago, and they have continued to engage in dangerous, high-risk practices that could once again put our economy at risk.  The 21st Century Glass-Steagall Act will reestablish a wall between commercial and investment banking, make our financial system more stable and secure, and protect American families."

The 21st Century Glass-Steagall Act would again force deposit banks to divest their divisions that engage in operations such as securities trading, insurance, swaps dealing, and hedge funds. It would also prevent any future mergers of federal deposit banks with trading or insurance companies, and would forbid directors or employees of a deposit bank to serve or work for a security trading or insurance company. This would prevent conflicts of interest or backroom arrangements between the two types of institutions.

While it would not limit the size of banks, trading institutions, or insurance companies, the proposed act would greatly reduce the likelihood that large federally-insured banks will fail – and therefore will need federal bailouts.

The voters of the 5th Congressional District have a choice on October 15.  If elected to Congress, I will work hard to address the largest issues we face as a country -- climate change, the economy, poverty.  Stabilizing the banking system is critical to economic growth in the future.   

Please visit wb4congress.com to learn more about my candidacy and don't hesitate to reach out to me personally -- my email is willbrownsberger@gmail.com and my cell phone is 617-771-8274.




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