U.S. Senators John McCain and Maria Cantwell have unveiled legislation that would reinstate the Glass-Steagall Act, which separates commercial and investment banking activities.
Former President Bill Clinton repealed the Depression-era legislation and today, many blame that move for allowing banks to become too big to fail.
“Under our proposal, too-big-to-fail banks would be forced to return to the business of conventional banking, leaving the task of risk-taking or management to others,” says Arizona Republican John McCain, according to Bloomberg.
The bill would increase the number of “smaller, more aggressive companies that are not so big that their failure would bring the entire economy down,” McCain says.
The legislation would be a bipartisan effort.
“Wall Street firms are about to post soaring end-of-the-year profits and bonuses, while Main Street suffers and wonders when they will have their recovery,” says Cantwell, a Democrat from Washington.
Calls for greater regulation over Wall Street have repeatedly grabbed headlines since the financial crisis erupted.
Former Federal Reserve Chairman Paul Volcker recently criticized those who oppose greater banking regulation.
“Has there been one financial leader standing up and saying, ‘this is really excessive’,” Volcker asked about 80 bankers, executives and investors at a conference, according to the New York Times.
When he did not get an answer, Volcker said “wake up, gentlemen. Your response is inadequate.”
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