The global financial crisis is not a random phenomenon, as a clueless cloud. Has its causes, and these causes have surnames. And worst of all is that the people who created the crisis have lost control over it. The house of cards financial derivatives, stacked one above the other, is out of control. Is unpredictable know how much, when and how fiercely is going to collapse. Several experts warn that a new world economic crisis, much more powerful and enormous that all known economic depressions, is coming. The term Glass–Steagall Act is also often used to refer to the entire Banking Act of 1933, after its Congressional sponsors, Senator Carter Glass (D) of Virginia, and Representative Henry B. Steagall (D) of Alabama. This article deals with only the four provisions separating commercial and investment banking. The article 1933 Banking Act describes the entire law, including the legislative history of the Glass-Steagall provisions separating commercial and investment banking. A separate 1932 law also known as the Glass–Steagall Act is described in the article Glass–Steagall Act of 1932. Starting in the early 1960s federal banking regulators interpreted provisions of the Glass–Steagall Act to permit commercial banks and especially commercial bank affiliates to engage in an expanding list and volume of securities activities. By the time the affiliation restrictions in the Glass–Steagall Act were repealed through the GLBA, many commentators argued Glass–Steagall was already “dead.” Most notably, Citibank’s 1998 affiliation with Salomon Smith Barney, one of the largest US securities firms, was permitted under the Federal Reserve Board’s then existing interpretation of the Glass–Steagall Act. President Bill Clinton publicly declared the Glass–Steagall law is no longer appropriate. The law was repealed on 12 November 1999 by the Financial Services Modernization Act, better known as Gramm–Leach–Bliley Act, just in time to allow the creation of Citigroup. Since then commercial banks could take more risks and more leverage as they were at the same time commercial and investment banks. Many economists and politicians think that the adoption of a law of this kind could avoid another crisis like the late 2008-2009.
Posted on: Sun, 14 Dec 2014 13:10:40 +0000
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