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The · Psychohistorian

What happened to Glass-Steagal?

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Congress passed a financial industry regulation bill yesterday. The bill was intended to prevent a recurrence of bank practices that may have contributed to the financial crisis, like taking depositors' funds and playing the stock market with them instead of lending them out to carefully vetted borrowers.

The thing is, those practices were already illegal little more than a decade ago. They were made illegal in the Glass-Steagal act of 1933 after the same practices contributed to the bank failures at the beginning of the great depression. The act prevented the occurrence of those questionable practices for 66 years, until the provisions prohibiting them were repealed in 1999.

So why not just repeal the repeal, reinstating the tried and true approach to fixing those problems? But no, tried and true is just too boring. Instead, Congress had to pass a 2300 page bill that's a mishmash of new and untested provisions. And if there's anything that certain about a 2300 page law, it's that it won't work as intended.

Slightly more info:
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