Glass-Steagall in Our Future: How Straight, How Narrow

Chapter

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.”

Keywords

Income Marketing Assure Volatility Defend 

References

  1. Bamber B, Spencer A (2008) Bear trap: the fall of bear stearns and the panic of 2008. Brick Tower Press, New York, NYGoogle Scholar
  2. El-Erian M (2008) When markets collide. McGraw-Hill, New York, NYGoogle Scholar
  3. Fortune Magazine (1930) Banking, group and branch, Fortune Feb 1930, 63–180Google Scholar
  4. 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
  5. Hoover H (1932) Address accepting the Republican Presidential Nomination, 11 August. http://americanhistory.about.com/library/docs/blhooverspeech1932.htm
  6. Kaufman H (2009) The road to financial reformation. Wiley, New York, NYGoogle Scholar
  7. Kregel J (2009) Managing the impact of volatility in international capital markets in an uncertain world. Summary (Levy Institute of Bard College), FallGoogle Scholar
  8. Mayer M (1980) The fate of the dollar. Times Books, New York, NYGoogle Scholar
  9. Modernization of the Glass-Steagall Act (1987) Hearing before the committee on banking. U.S. Senate, GPO, Washington, DCGoogle Scholar
  10. Moore GS (1987) The banker’s life. W. W. Norton & Co, New York, NYGoogle Scholar
  11. Moss DA (2009) An ounce of prevention. Harvard Magazine, 24 Sept/OctGoogle Scholar
  12. Perkins EJ (1971) The divorce of commercial and investment banking: a history. Bank Law J (June) 88(6):438–528Google Scholar
  13. Sheng A (ed) (1996) Bank restructuring: lessons from the 1980s. The World Bank, Washington, DCGoogle Scholar
  14. Sheng A (2009) From Asian to global crisis. Cambridge University Press, New York, NYGoogle Scholar
  15. Turner LA (2009) The turner review: a regulatory response to the global banking crisis. Financial Services Authority, London, MarGoogle Scholar
  16. Wessel D (2009) In fed we trust. Crown Business, New York, NYGoogle Scholar
  17. Wolf M (2009) This time will never be different. Financial Times, September 28Google Scholar
  18. Zandi M (2009) Financial shock. FT Press, Upper Saddle River, NJGoogle Scholar

Copyright information

© Networks Financial Institute 2011

Authors and Affiliations

  1. 1.The Brookings InstitutionWashingtonUSA

Personalised recommendations