Wall Street, in characteristic fashion, is arguing that President Barack Obama's banking reform plans are populist exercises that would not have prevented the financial crisis of 2008. Indeed, some of the seeds of that crisis were sowed in political decisions to expand home ownership and keep inflation low.
But the proposals Obama rolled out over the last two weeks — taxing a bank's risk, limiting bank consolidation and re-erecting a partial wall between commercial banks and their investment activities — are worthy of consideration in an era in which taxpayers have an interest in saving any financial firm considered "too big to fail." After 40 years of increasing deregulation of the financial markets, it's clear more safeguards are needed ...
Obama is on the right track to partially embrace reinstatement of the Glass-Steagall Act, which for most of the last century prohibited banks and investment houses from merging. Obama's proposal, inspired by former Federal Reserve Chairman Paul Volcker, would prohibit banks that benefit from federal deposit insurance from gambling their capital in hedge funds or the market. That makes sense. Taxpayers should not be subsidizing banks' own investment activities.
The financial sector — in predictable self-interest — will resist regulation. And it's disturbing to contemplate what last week's U.S. Supreme Court ruling on campaign finance could mean for how the financial sector will try to influence the midterm elections to block reform. But forgoing reform would be an insult to taxpayers who bailed out the industry to ensure the Great Recession didn't become a depression. As Wall Street returns to its outsized bonuses, 10 percent of Americans remain out of work. After an era of deregulation, the industry has run out its leash. It needs to be reined in.
http://www.tampabay.com/opinion/editorials/time-to-rein-in-the-big-banks/1067879As an editorial, this is a mixed bag
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
