As Speaker of House during the 1990s, Newt Gingrich and the Republican Party were instrumental in killing the Glass-Steagall Act, which separated investment banks and traditional lending banks. The combining of these banks in the wake of the repeal of that regulation led to the economic collapse in 2008. In an interview on ABC with Jake Tapper, Gingrich admitted that deregulating the banking industry was a mistake. Here is the exchange between the two.
￼￼￼TAPPER: One question I want to ask has to do with your call to repeal the Wall Street reforms, Dodd-Frank. I don’t think a lot of Americans would understand why anyone would want to repeal regulations that happened after this calamity on Wall Street. If you disagree with those regulations that were imposed, do you agree at least that there should be some new reforms or regulations?
￼￼￼GINGRICH: Sure, there should be very decisive reforms. I think, in retrospect, repealing the Glass-Steagall Act was probably a mistake. We should probably reestablish dividing up the big banks into a banking function and an investment function and separating them out again.
Here’s the video:
Glass-Steagall became law in the wake of the Great Depression. It established regulations that divided investment banks and lending banks so that banks would not get too big, nor would they be able to gamble with money used for lending. Reinstating the regulation would break up the big banks such as Citigroup and JPMorgan Chase. When Newt Gingrich says that deregulating the banking industry was a mistake, it’s worth taking seriously. A Republican admitting to a mistake is very rare so hopefully this admission will spur Democrats and Republicans alike to make reinstating Glass-Steagall a reality so that big banks will never again threaten the health of the American economy.