Question for DUers: Would reinstating Glass-Steagall late last year have prevented us from

[secondwind]

having to inject stimulus funds into the economy?????


I have Republican friends who are saying just that. Could we have gotten Congress to reinstate G-S that quickly? That is my response. But we have some very smart people in this forum, so I thought I'd throw this out ......

Anyone?

[slackmaster]

1. Glass-Steagall was gutted and effectively repealed in 1999

What are you talking about?

http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act

[secondwind]

2. oops, sorry! I meant reinstating it! I've heard the word "repeal" so much

lately from Republican friends, it must be an earworm I have!

[slackmaster]

6. Thanks - Reinstating it last year would have been way, way too late

The damage was already done.

[MadMaddie]

14. Agreed! The Avalanch was already happening before 2009

it was just a matter of how bad it was going to be.

[Lithos]

3. No

There was no way that re-implementing G-S would have rolled back the bad bundling and mixing of risk pools which had already occurred. The money supply was already tainted.

It will also take years after the reinstatement of G-S before things start to stabilize again.

[secondwind]

4. thanks

[Captain Hilts]

5. No. It was the complete lack of oversight by the R congress that created this problem. nt

[OHdem10]

7. Reinstating G/S separates Investment Banks from Commercial

Banks. This protects Taxpayers from Hedgefund Gamblers.
Right now they can use Taxpayers money to gamble because
the Repeal of G/S permitted them (Bankers) to use these funds.
This is one of the main reasons for the Financial Failure.

Separating the two Banks measn the Investors can only use
their own funds and if they cause their banks to fail so be it.

The Taxpayers are protected.

[AllentownJake]

8. It would have made the fraud harder to continue and would have been better for the economy

There would have been no cheap money to pump up the stock market, banks would have had to do what they were founded to do, lend money.

Instead we got banks borrowing money investing it in the market. All well and good if your goal is to make the stock market higher, which has less and less correlation with the real economy.

[Armstead]

9. NO -- But it would have laid the groundwork to prevent it from happening again

[Zynx]

10. No. The recession was a a done deal at that point. There was no avoiding it.

If in October we had reinstated Glass-Steagall, that would have actually worsened the financial crisis in the short run by forcing banks to sell off units when the private financial markets were not functioning. It would resulted in additional failures.

The stimulus was needed regardless. Bear in mind, the bailout and the stimulus are two entirely different actions.

[davidwparker]

18. +1

The bailout is why I'm moving my money to a credit union.

The stimulus in the form of job creation in this country is what will turn around this country.

[DrToast]

11. No, that's absurd

In fact, it's debatable if whether or not Glass-Steagall would have prevented the crisis at all.

[yurbud]

12. A REPUBLICAN said that? It would help in the long run and could have been done quickly

but wouldn't have as direct or as quick an effect as the stimulus.

[dkf]

13. How could it have been done quickly?

You'd need an entirely new corporate structure for the firm. Taking apart human resources would be tough. The banks have been using the securities cash as deposits. Im not sure what effect that would have on capital ratios if you pull those apart.

[yurbud]

15. the law could have been done quickly, like the repeal of prohibition

[MrsCorleone]

16. No way. Irreversible damage had been done by '04/'05.

Mortgage industry deregulation in '02 created the perfect storm in an already 'effed up financial system post GS repeal. That's when the general population joined in en masse on the home buying insanity &/or rampant fraud. A lot of those bad loans were already coming home to roost by '05.

The media, coupled with the absence of prudent regulations, kept the stock market juiced, giving the illusion that all was well. Most foreign investors pulled out of housing by '05, leaving many amateur speculators to learn the hard way that the party was over.

We were screwed waaaaay before last year. Your republican friends are buying RNC/Wall Street propaganda.

[jmowreader]

17. Reinstating Glass-Steagall at the end of the Clinton administration, maybe

[MrsCorleone]

19. Lol. Yep. Should have never been repealed. nt