Wow, Obama correctly addressed Glass-Steagall in Rolling Stone just before the election.

[banned from Kos]

I've looked at some of Rolling Stone's articles that say, "This didn't go far enough, we didn't institute Glass-Steagall" and so forth, and I pushed my economic team very hard on some of those questions. But there is not evidence that having Glass-Steagall in place would somehow change the dynamic. Lehman Brothers wasn't a commercial bank, it was an investment bank. AIG wasn't an FDIC-insured bank, it was an insurance institution. So the problem in today's financial sector can't be solved simply by re-imposing models that were created in the 1930s.

Read more: http://www.rollingstone.com/politics/blogs/taibblog/obama-defends-his-finance-reform-record-to-rolling-stone-a-brief-response-20121026#ixzz2EEilBMIm
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President Obama is precisely right again. The vast majority of failed banks were not subject to Glass-Steagall - which is an antiquated weak-tea law from the 30's (the part repealed in 1999). Dodd-Frank is much stronger. It even has a "death penalty" for TBTF banks.

Yes, I know. Bank griefers yell about Glass-Steagall. But they don't know what they really want.

Score another for President Obama!

[unblock]

1. i've actually read parts of dodd-frank.it was written by people who really understand modern finance

and actually wanted to reign it in.

considering the typical loophole and sloppy legislation that typically regulates most industries, i was very impressed.

and this is coming from someone in the financial sector who is a "victim" of such regulation. i think it's overall an excellent piece of legislation in a very complicated area.

[ShadesOfBlue]

2. I have that same RS issue

and found the interview to be very interesting, including the comments regarding Glass-Steagall.

[Cha]

3. Thanks banned from Kos!

[amandabeech]

4. Well, banned, you are right that reinstating Glass-Steagall

would not have prevented AIG. The New York State Insurance Commissioner could have prevented a considerable amount of that pain.

However, breaking the wall between investment banks and commercial banks did loosen a considerable amount of capital that could be used for all kinds of nefarious purposes so long as the ratings industry agreed to play along.

Moreover, I personally know of one very, very fine super solid super-community bank that was enticed into a ridiculous acquisition that would have been illegal if G-S had not been ripped to shreds. The served individuals and small businesses extremely well and had for many years. I cannot go into the details, but sometimes it takes only one short-sighted idiot pushing "the new thing" to undo what generations have built up. It still makes me ill to think about it.

I'm sorry that I cannot share your joy.