Glass-Steagal Comeback: Maybe a Good Idea…Just Not Now

There is a lot of talk about the return of the Glass-Steagal Act, the depression-era rule that separated commercial banks from investment banks.  Ever since Clinton signed the repeal of this act, the banks have wrought a great deal of damage in their concoctions of the modern-day Frankensteins that now handle our money.

I don't have a strong opinion on what a new separation rule should look like just yet and I believe that keeping our lending institutions away from speculation is a no-brainer.  That said, I do feel strongly that right this minute is probably not a great time to ramp something like this up.

There is quite enough going on in Financeland without this battle added to the mix.  Since the banks have so selflessly and thoughtfully begun to pay back taxpayer money (wink), there has actually been a perverse sense of optimism in the sector that may or may not spill over into actual lending. 

Too early to tell if this optimism will be meaningful for the economy and the average American, but shouldn't we allow it a few months to possibly manifest itself, even if it is a longshot?

My sense is that there will be plenty of opportunity to remake the banking system later in 2010, let's not get ahead of ourselves just yet.

Here are some other voices on the matter:

Will The US Reinstate Glass-Steagal (The Big Picture)

Democrats Push for Reinstatement of Glass-Steagal (Zero Hedge)

McCain Leads Effort to Reinstate Glass-Steagal  (OpenCongress.org)

 

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