Yesterday on ABC, Newt Gingrich admitted that repealing the Glass Steagall Act, the law that separates lending banks and investment banks, was a mistake. Gingrich also stated that the regulatory legislation should be reinstated. Now, a presently serving Republican congressman agreed that Glass-Steagall should be reinstated as well.
During a conservative radio show with Bill Bennett last week, GOP Rep. Paul Ryan agreed with a caller that the big banks should once again be regulated by Glass-Steagall. Yes, THAT Paul Ryan. You know, the Paul Ryan who heads the House Budget Committee and wants to end Medicare? That’s him. Here is the exchange.
CALLER: Hasn’t there been a separation with the removal of Glass-Steagall and the uptick rule to let Wall Street go wild? When is someone going to put that back in place? We need to put that back in place to help stabilize things.
RYAN: Yeah, I agree with that. Mixing banking and commerce, meaning allowing banks to go do non-banking activities, by leveraging their deposits. The way I look at this, there’s a lot of merit to what you just said. If banks want to make hedge fund-like returns, then they should go be a hedge fund. But if you want to be a bank, then be a bank. Don’t try to be a hedge fund and take undue risks with your depositors money. So the way I see it, we need to have more conservative leverage limits, so you can’t leverage too much, and keep these firms within the silos where they are supposed to operate based on the degree of risk that they’re supposed to take. And if you’re just taking deposits, then I think we need to reestablish those kind of limits.
Here is the audio.
This is an astonishing development. Two major Republican politicians are saying that we need to reinstate Depression-era legislation that would break up the big banks and restore critical regulations that keep the banking industry in check, thus helping to prevent future economic collapses. After continually berating the Dodd-Frank law signed by President Obama and calling for it to be repealed, Republicans are beginning to call for a return to banking regulations signed into law by Franklin D. Roosevelt, the greatest liberal in American history. Let’s hope more jump on board the bandwagon.