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Can a return to Glass-Steagall provide financial stability in the US financial system?

Author

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  • Jan Kregel

    (Levy Economics Institute of Bard College)

Abstract

In the immediate aftermath of the current financial crisis in the United States the response has been to resolve small and medium size banks, while large banks experiencing financial trouble have been given both direct and indirect government support. This, however, has resulted in a number of larger banks absorbing smaller ones, creating an even smaller number of even larger banks that dominate the financial system. This article deals first with a comparison of the problems created by "too big to fail" financial institutions. The second section deals with the possible restoration of Glass-Steagall type legislation as a means of restoring single-function financial institutions. It concludes that alternatives to separation of functions will have to be found to deal with multifunction financial institutions since most lending activity requires securities markets activities.

Suggested Citation

  • Jan Kregel, 2010. "Can a return to Glass-Steagall provide financial stability in the US financial system?," PSL Quarterly Review, Economia civile, vol. 63(252), pages 39-76.
    • Handle: RePEc:psl:pslqrr:2010:13
    as

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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9436/9331
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Financial Crisis; Instability; Rules; Banking System;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G01 - Financial Economics - - General - - - Financial Crises
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • F30 - International Economics - - International Finance - - - General
    • N22 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: 1913-

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