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Only Glass-Steagall Has Any Real Teeth
20 April 2011
He concludes: "Before we close this dark chapter of banking history, it is worth looking back at Ferdinand Pecora. In 1933, this Italian immigrant was put in charge of the Levin commission of his day — an inquiry into the causes of the 1929 crash. Its findings of banks’ abusive practices and conflicts of interest led to the creation of the Securities and Exchange Commission and the passage of the Glass-Steagall Act separating commercial and investment banking. The half a century that followed was among the most stable in U.S. banking history. Levin, Dodd, Frank, and Vickers should have striven for the same level of ambition, if not the same solutions, as Pecora and Glass-Steagall. A crisis is a terrible thing to waste." |
Even a Financial Times editor can tell the difference between toothless financial reform like that represented by the Dodd-Frank reform, the British Independent Commission on Banking, and even Carl Levin’s U.S. Senate report on banking abuse, as compared to a Glass-Steagall Act. Francesco Guerrera, Financial Times finance editor, reports in a commentary, today, that the banks have not been impressed with any of these so-called reforms. "The issue, though, is whether these and other reform efforts are the best that regulators can do to remedy the faults laid bare by the worst financial storm in generations," Guerrera writes. "My empirical gauge — looking at how bankers reacted — suggests not."