Archive: July, 2013
Jeff Gelles, Inquirer Business Columnist
The lingering debate over the Dodd-Frank Act's financial reforms typically centers on what happens after the next financial crisis hits. In particular, many experts from across the political spectrum worry that it won't end the problem known as "too big to fail" - that the federal government still won't feel confident enough about the economic fallout to force one or more of our largest, most complex financial institutions into receivership much as the Federal Deposit Insurance Corp. routinely unwinds smaller banks.
Sen. Elizabeth Warren (D., Mass.) recently joined with Sen. John McCain (R., Ariz.) to address that problem by trying to avert it - by forcing the dismemberment of some of the mega-banks in question. The unlikely pair called for a return of the Glass-Steagall Act - the Depression-era law that walled off ordinary commercial banking, protected by FDIC insurance, from riskier investment banking. (Warren steadfastly defends that proposal, which echoes a stream of similar calls since the 2008 crash, in a CNBC video that you can view below.)
Warren, who formerly headed the panel charged with overseeing the Troubled Asset Relief Program, recognizes as well as anyone that preventing the next crisis - or at least minimizing its likelihood - is as important as mapping out what happens once it hits. And yesterday, both she and the agency that she first proposed, the Consumer Financial Protection Bureau, again helped turn the spotlight on that crucial goal - and on evidence that some congressional Republicans still haven't grasped a key lesson from the last crisis.