In 1933, in the wake of the 1929 stock market crash and during a nationwide commercial bank failure and the Great Depression, two members of Congress put their names on what is known today as the Glass-Steagall Act (GSA). This act separated investment and commercial banking activities. At the time, "improper banking activity", or what was considered overzealous commercial bank involvement in stock market investment was deemed the main culprit of the financial crash. According to that reasoning, commercial banks took on too much risk with depositors' money.
The bill that ultimately repealed the Act was introduced in the Senate by Phil Gram (Republican ofTexas and in the House of Representatives byJim Leach (R Iowa in 1999. Many feel that this lead the collapase of the banking system. Other deregulation helped too.On Planet Greed, where we just finished bailing out banks to save the economy from collapse. Why was this necessary? Because banks were using depositor funds (that were government FDIC insured) to take giant gambles on risky deritives investments. Las Vegas night at your local bank with OUR money!
Ever since the repeal of Glass-Steagall in 1999, the lure of big returns from risky investments has proven too tempting for commercial banks to pass up. Why should they loan money to businesses and individuals in their community at 5-7% when they can roll the dice and potentially make big money with derivatives "investments"? Their shareholders have come to expect bigger returns in the post-1999 market and their stock price takes a hit if they can't bring in rock star returns (that aren't possible with commercial or personal loans, not even Credit Cards). In their mind, it is better to roll the dice on risky investments and let the government bail them out again if they shoot craps.
This mentality won't change until we re-instate Glass-Steagall and make Commercial Banks stop behaving like Investment Banks.
It is time to support those brave protesers in NYC. They will not get the news coverage they deserve and the media will do little to explain bank deregulation to the general public. I am to undereducated to do it in this post but hope one of you reads this and it makes you want to learn more on your own.
Ever since the repeal of Glass-Stea
This mentality won't change until we re-instate Glass-Stea
It is time to support those brave protesers in NYC. They will not get the news coverage they deserve and the media will do little to explain bank deregulation to the general public. I am to undereducated to do it in this post but hope one of you reads this and it makes you want to learn more on your own.
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