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Glass-Steagall in Our Future: How Straight, How Narrow

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  • Martin Mayer

Abstract

A dozen years ago, Randall Kroszner, soon to be one of George W. Bush’s economic advisors and a Governor of the Federal Reserve, could comment in a Levy Institute seminar, without fear of contradiction, that there was no evidence to back the 'public interest rationale' for the separation of commercial and investment banking. Except for deposit insurance (and even here, there were mutterings about moral hazard), the limits imposed on banking by the Glass-Steagall Act of 1933 were roundly condemned through the entire cadre of academic and corporate economists, as the old law was unceremoniously junked 66 years later. A few of us did worry about the loss of information that could result as the veil of bank secrecy was extended over additional transactions, but we were not really respectable. Today, we few stand on the high ground of observed recent experience and watch the survivors of the still-acclaimed wave of financial innovation struggle defensively, if not repentantly, up the slopes of what Alan Greenspan called 'shocked disbelief.' Ten years after its repeal, Glass-Steagall has a constituency again.

Suggested Citation

  • Martin Mayer, 2009. "Glass-Steagall in Our Future: How Straight, How Narrow," NFI Policy Briefs 2009-PB-07, Indiana State University, Scott College of Business, Networks Financial Institute.
    • Handle: RePEc:nfi:nfipbs:2009-pb-07
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    File URL: http://www.indstate.edu/business/sites/business.indstate.edu/files/Docs/2009-PB-07_Mayer.pdf
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    References listed on IDEAS

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    1. Jan Kregel, 2009. "Managing the Impact of Volatility in International Capital Markets in an Uncertain World," Economics Working Paper Archive wp_558, Levy Economics Institute.
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    Cited by:

    1. Levent DUMAN & Özgür ÜÞENMEZ, 2016. "State and Governance in the Contemporary International Economic System," Journal of Economics and Political Economy, KSP Journals, vol. 3(3), pages 575-586, September.

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    More about this item

    Keywords

    Glass-Steagall Act; Gramm-Leach Bliley Act; Financial Crisis; Financial Regulatory Reform;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G01 - Financial Economics - - General - - - Financial Crises
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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