Letters to the Editor – Restore Glass Steagall
by Tom on October 28, 2009
in Market Musings
Interesting commentary. Let me explain a bit:
- Glass Steagall is the act that separated investment banking from “regular” banking after the Great Depression.
- It was repealed in 1999 – because it was “different this time.”
- As Yves Smith at Naked Capitalism has called it, the separation of Casino Banking from Traditional banking.
Now we’ve got at least three people:
- The former chairman of the Federal Reserve
- The current English equivalent to Ben Bernanke
- A former chairman and CEO of Citigroup
All saying that we need to separate the big institutions so that the risks that are taken by the Morgan Stanleys and the Merrill Lynch’ of the world don’t jeopardize the First State Banks of the country who have the deposits of the general population.
I’m not sure I’d bet against these three, would you?
Tom Vanderwell
Letter – Volcker’s Advice – NYTimes.com
Re “Volcker’s Voice, Often Heeded, Fails to Sell a Bank Strategy” (front page, Oct. 21):As another older banker and one who has experienced both the pre- and post-Glass-Steagall world, I would agree with Paul A. Volcker (and also Mervyn King, governor of the Bank of England) that some kind of separation between institutions that deal primarily in the capital markets and those involved in more traditional deposit-taking and working-capital finance makes sense.
This, in conjunction with more demanding capital requirements, would go a long way toward building a more robust financial sector.
John S. Reed
New York, Oct. 21, 2009The writer is retired chairman of Citigroup.
