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Goldhedge

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#1
The Truth About Glass-Steagall
The repeal of the Glass-Steagall Act has not been the source of U.S. financial woes, and if reinstated, would do little to prevent crises in the future.


The Glass-Steagall Act was enacted in 1933 in response to banking crises in the 1920s and early 1930s. It imposed the separation of commercial and investment banking.

In 1999, Glass-Steagall was partially repealed by the Gramm-Leach-Bliley Act. When the United States suffered a severe financial crisis less than a decade later, some leapt to the conclusion that this repeal was at least partly to blame. Indeed, both the Republicans and the Democrats included the reinstatement of Glass-Steagall in their 2016 election platforms

In The Repeal of the Glass-Steagall Act: Myth and Reality, a new study, international financial regulatory expert Oonagh McDonald argues against the idea that repealing Glass-Steagall caused the financial crisis, and that bringing it back would prevent future crises.

According to McDonald, despite calls to reinstate Glass-Steagall by both Republicans and Democrats, it is no silver bullet for our contemporary financial woes.

Instead, McDonald argues, Glass-Steagall left the U.S. with a fragile and expensive set of unit banks, without actually fixing the problems banks had experienced prior to 1933. After many years and changes to the structure of the banking and financial system, small sections of Glass-Steagall were repealed by the Gramm-Leach-Bliley Act (GLBA), without entirely dismantling it.

When the US experienced the financial crisis of 2008, both Republicans and Democrats leapt to the conclusion that the repeal of Glass-Steagall had caused the financial crisis. However, McDonald argues that these banking regulations could not have prevented the 2008 crisis and that the blame for bank failures lies elsewhere.

In the aftermath of the financial crisis, anger towards Wall Street and demands for further regulation of the banking system have once again become salient. The problem with current proposed reforms to the financial sector is the failure to address the real cause of past financial crises, instead simply attempting to placate justified public anger surrounding the issue with band-aid solutions – and still leaving the banking system susceptible to another crisis.

By focusing the public’s anger on ‘greed,’ ‘overpaid bankers,’ and so-called ‘casino banking,’ politicians have been able to divert attention from the ultimate cause of the financial crisis, namely their belief that affordable housing can be provided by encouraging— or even obliging—banks to advance mortgages to homebuyers with low to very low incomes and requiring government-sponsored enterprises to purchase an ever-increasing proportion of such loans from lenders,” McDonald concludes. “If politicians continue to believe that affordable housing can only be provided in that way and act accordingly, no one need look any further for the causes of the next financial crisis.”

In short, the blame for the financial crises lies in the irresponsible policies pushed by politicians, not the actions of big banks.

Read the study….

http://catoinstitute.tumblr.com/pos...l&utm_source=facebook.com&utm_campaign=buffer
 
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gringott

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#2
Yeah, ok I agree the FedGov should not be in the housing financing business. But they shouldn't be in the bank bailout business either. Criminal activities were and are going on in the big banks, yet they skate and at worst pay a pittance as a fine. Too many examples, Wells Fargo is the latest. When they go to jail, from top to bottom, for fraud, then we will see the banks start cleaning up their act. Not before.
 

Krag

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#4
https://en.wikipedia.org/wiki/Glass–Steagall_legislation

Read about the reason for it in the first place.

Repealing it was a disaster and the political whores behind it should have been lined up against the wall and gunned down. Nafta, GATT and other treaties also created illusory prosperity for a period. The Wall Street, day trading and unearned income made through Wall Street is one of the great disasters against lawful living. These people are parasites and cockroaches, the less than 1% who have worked to outsource jobs and destroy the working class. http://www.cnbc.com/2016/11/16/steve-bannon-could-be-wall-street-worst-enemy.html
 
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BarnacleBob

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#5
Identify who the real vampire is and therein lays the answer! Something for nothing is pure fantasy, even if it produces vote buying.