Abstract
A dozen years ago, Randall Kroszner, soon to be one of George W. Bush’s economic advisors and a Governor of the Federal Reserve (Fed), could comment in a Levy Institute seminar, without fear of contradiction, that there was no evidence to back the “public interest rationale” for the separation of commercial and investment banking. Except for deposit insurance (and even here, there were mutterings about moral hazard), the limits imposed on banking by the Glass-Steagall Act of 1933 were roundly condemned through the entire cadre of academic and corporate economists, as the old law was unceremoniously junked 66 years later. A few of us did worry about the loss of information that could result as the veil of bank secrecy was extended over additional transactions, but we were not really respectable. Today, we few, still not a happy few, stand on the high ground of observed recent experience and watch the survivors of the still acclaimed wave of financial innovation struggle defensively, if not repentantly, up the slopes of what Alan Greenspan called “shocked disbelief.”
This chapter also appeared as Networks Financial Institute Policy Brief 2009-PB-07.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Griffiths (2009).
- 2.
Reed (2009).
- 3.
Moss (2009, 24).
- 4.
Fortune Magazine (1930, 138).
- 5.
Hoover (1932).
- 6.
Perkins (June 1971, 525).
- 7.
Kaufman (2009, 121).
- 8.
Moore (1987, 70–71).
- 9.
Modernization of the Glass-Steagall Act, Hearing Before the Committee on Banking, U.S. Senate. Washington, DC: GPO, July 30, 1987, 45.
- 10.
Wolf (2009, 8).
- 11.
Sheng (2009, 326).
- 12.
Sheng (1996).
- 13.
Mayer (1980, 334).
- 14.
I am indebted to Carter Golembe for pointing this out.
- 15.
Kregel (2009, 16–17).
References
Bamber B, Spencer A (2008) Bear trap: the fall of bear stearns and the panic of 2008. Brick Tower Press, New York, NY
El-Erian M (2008) When markets collide. McGraw-Hill, New York, NY
Fortune Magazine (1930) Banking, group and branch, Fortune Feb 1930, 63–180
Griffiths K (2009) FSA’s last weapon in the new financial world will be discretion. Telegraph, 19 Mar. http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5012735/FSAs-last-weapon-in-the-new-financial-world-will-be-discrection.html
Hoover H (1932) Address accepting the Republican Presidential Nomination, 11 August. http://americanhistory.about.com/library/docs/blhooverspeech1932.htm
Kaufman H (2009) The road to financial reformation. Wiley, New York, NY
Kregel J (2009) Managing the impact of volatility in international capital markets in an uncertain world. Summary (Levy Institute of Bard College), Fall
Mayer M (1980) The fate of the dollar. Times Books, New York, NY
Modernization of the Glass-Steagall Act (1987) Hearing before the committee on banking. U.S. Senate, GPO, Washington, DC
Moore GS (1987) The banker’s life. W. W. Norton & Co, New York, NY
Moss DA (2009) An ounce of prevention. Harvard Magazine, 24 Sept/Oct
Perkins EJ (1971) The divorce of commercial and investment banking: a history. Bank Law J (June) 88(6):438–528
Reed JS (2009) Volcker’s advice. New York Times, 21 Oct. http://www.nytimes.com/2009/10/23/opinion/l23volcker.html?_r=1&scp=1&sq=reed volcker&st=cse
Sheng A (ed) (1996) Bank restructuring: lessons from the 1980s. The World Bank, Washington, DC
Sheng A (2009) From Asian to global crisis. Cambridge University Press, New York, NY
Turner LA (2009) The turner review: a regulatory response to the global banking crisis. Financial Services Authority, London, Mar
Wessel D (2009) In fed we trust. Crown Business, New York, NY
Wolf M (2009) This time will never be different. Financial Times, September 28
Zandi M (2009) Financial shock. FT Press, Upper Saddle River, NJ
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2011 Networks Financial Institute
About this chapter
Cite this chapter
Mayer, M. (2011). Glass-Steagall in Our Future: How Straight, How Narrow. In: Tatom, J. (eds) Financial Market Regulation. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-6637-7_3
Download citation
DOI: https://doi.org/10.1007/978-1-4419-6637-7_3
Published:
Publisher Name: Springer, New York, NY
Print ISBN: 978-1-4419-6636-0
Online ISBN: 978-1-4419-6637-7
eBook Packages: Business and EconomicsEconomics and Finance (R0)