So I am researching the history of Glass Steagall for a new project, and I am continually amazed to learn the details how this law was slowly overturned. It is an informative lesson in tenacity of gradual erosion, how bank lobbyists can slowly sand away rules, with a healthy does of regulatory capture thrown in.

We know that Glass Steagall (aka The Banking Act of 1933) was a simple, effective, easy-to-follow regulatory rule that kept commercial (aka taxpayer-insured depository) banks separate from their more speculative Wall Street investment bank brethren.

So exactly how did we end up dismantling that, eventually overturning it in 1999?

To paraphrase Hemingway: Slowly at first, then all at once.

This extremely effective law was eroded gradually over time. Its history shows that numerous attempts were made to carve out exceptions for decades. Many of these were successful.

The project went in a different direction, but I am left with lots of notes about how Glass Steagall ended. Rather than toss them, they are worth posting. From about a dozen sources, here are my rough draft and notes:

1967 saw an attempt to permit banks to underwrite municipal revenue bonds; that died in the Senate. By 1974, following the passage of ERISA laws and the introduction of the 401(k), bank regulator OCC authorized national banks to provide “automatic investment services.” This permitted pre-planned funding of investment accounts — cash in deposit accounts was allowed to be withdrawn “regularly and automatically” to purchase securities. The Federal Reserve determined that Glass-Steagall allowed banks to place commercial paper.

The proverbial “Camel’s nose was in the tent.” Once that occurred, bank lobbyists managed to carve out an increasingly large set of exceptions. Those gradual exceptions led to a few major changes in how the Glass-Steagall act was interpreted, and with greater exceptions to come.

The next seed was planted in 1977: The Federal Reserve Board staff argued bank holding companies should be able to establish securities affiliates that underwrote and dealt in government securities and other bank-eligible securities beyond mere commercial paper. OCC authorized in 1978 the selling of securitized mortgage backed paper.

Nonbank Banks: In 1982, there were a huge series of changes, including the rise of the “Nonbank Banks” These were non FDIC insured financial institutions that looked and felt like banks, but were technically deemed non banks.

But a huge shift intellectually occurred in 1982: FDIC chairm William Isaac issued a “policy statement” suggesting state chartered (non-Federal Reserve member) banks could establish “subsidiaries.” These seperate companies wholly or partially owned by banks would be permitted to do what Glass Steagall disallowed banks to do: Underwrite and deal in securities.

Later in 1982, Comptroller C. Todd Conover of the OCC approved the mutual fund company Dreyfus and retailer Sears — both not banks — to establish “nonbank bank” subsidiaries. These were to be exempt from Glass Steagall. Note that Federal Reserve Chairman Paul Volcker opposed this, and asked Congress to overrule both the FDIC’s and the OCC’s actions.

What began with Dreyfus and Sears, next moved on to a series of non bank banks including Merrill Lynch, J. & W. Seligman & Co. Prudential-Bach.

The International Banking Act of 1978 allowed foreign banks to establish or purchase US banks and security firms, leading US banks to complain to Congress that Glass-Steagall was interfering with their ability to compete internationally (sound familiar?).

Enter GreenspanIn 1987, newly appointed Federal Reserve chair pressed the FOMC Board for formal approval of “Section 20 affiliate exemptions.” Fed Chair Paul Volcker had not supported these exemptions to allow bank holding companies to establish subsidiaries. Greenspan of course, never met a deregulatory act he didn’t support. So despite the fact that these subsidiaries were divisions of FDIC insured depository banks, they were permitted to engage in iBank like underwriting of RMBS, Commercial paper, and Muni bonds — pretty much anything but equities. With Section 20 of Glass-Steagall’s  prohibition for banks underwriting and dealing in securities mostly neutered, the line between iBanks and depository institutions was blurred.

To the prior list of exemptions above, we can add the following: Bankers Trust, Citicorp, and J.P. Morgan & Co. 1987 was the year the Federal Reserve Board approved their subsidiaries to underwrite securities.

Also in 1987: Competitive Equality Banking Act (CEBA). In theory, this was a response to the Savings & Loan crisis, but it too carved out even more exemptions to Glass Steagall.

In 1988, Greenspan recommended that the FRB expand underwriting powers of Section 20 affiliates. He discussed eliminating the key that component separated commercial deposit banking and iBanking. In Congressional testimony and public statements, Greenspan pressed for the Federal Reserve Board to repeal Glass-Steagall.

The next major milestone: 1995. That was when Representative James A. Leach (R-IA) became chair of the House Banking Committee. One of his first acts was to introduce a Greenspan supported bill to repeal key provisions of Glass-Steagall (notably, Sections 20 and 32). Treasury Secretary Robert Rubin announced the Clinton Administration’s support. Greenspan, Leach and Rubin believed that Glass-Steagall was “obsolete and outdated.”

Travelers and Citicorp Merger:

The final straw for Glass Steagall came on April 6, 1998: That was when Travelers and Citicorp announced their merger.

The then existing rules allowed Citigroup to own the Travelers insurance underwriting business for two years before either divestment or FRB approval. Alternatively, the Bank Holding Company Act could be amended or overturned to “permit affiliations between banks and underwriters of property, casualty, and life insurance.” (Citigroup’s Salomon Smith Barney was already kosher under the affiliate exemption rules).

And that is exactly what happened. The Gramm-Leach-Bliley Financial Modernization Act of 1999 was signed into law on November 12, 1999.

Here is Bill Moyers:

After 12 attempts in 25 years, Congress finally repeals Glass-Steagall, rewarding financial companies for more than 20 years and $300 million worth of lobbying efforts. Supporters hail the change as the long-overdue demise of a Depression-era relic.

It is quite a tortured history. Corporations can exist forever, and their lobbyists and paid advocates can slowly whittle away laws they don’t like. It is nothing short of amazing to see how effective they can be when confronted with laws they don’t like.

This points out why the regular generational crises that come along should provide the opportunity to re-establish regulations, and reduce their influence in times of panic.

Greenspan, Rubin, Reagan and Clinton all contributed to its demise.  But the missed opportunity here was President Obama’s — – it may be his greatest failure. It may come to eventually define his presidency and could be the reason it may be a single term.

Category: Really, really bad calls, Regulation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

36 Responses to “A Brief History Lesson: How We Ended Glass Steagall”

  1. I’m one who supported his candidacy…

    But it immediately became clear that either he had no idea what was needed or was completely captured by Wall Street and the TBTF Banks. Once I saw he was bringing in an economic team that not only supported the failed “Randian” economic model of de-regulation and worship of “John Galtian” CEO’s striding magnificently across the landscape… but helped create it…

    (which is actually a ‘welfare for oligarchy’ model when scaled)

    I knew we were in trouble… big trouble.

  2. AHodge says:

    Beautiful
    the man with the legal resources should also go into how SEC 10b-5 was gutted
    mainly with slow “precedents”
    as you first pointed out

    im for narrow banking far tougher than even glass steagall
    even the tea party should applaud
    we would be getting gthe govt out of guaranteeing every single excresence with free guaranteed funding
    that a TBTF can dream up

  3. Jim67545 says:

    For those accustomed to dealing with risk (and the consequential losses that may result) setting any arbitrary limits can seem stupid. So someone with a credit score of 640 can get a mortgage but someone with 639 cannot, with no other factors considered?

    Unfortunately, the burden falls to the regulators to 1. determine that the risk profile in the insititution is excessive especially if it is a very large, international and complex one, and 2. determine that institutions are not having their risk dramatically increased, unbeknownst to them individually, by their combined activities. Of course, this inherently needs to be forward looking. I question whether the existing regulators, their benchmarks or their procedures are currently up to the task. But, that is where the rubber needs to meet the road.

  4. VennData says:

    This is missing the point. If you let banks leverage at 50 to one, they will fail, eventually. If you keep their leverage ratios lower, as they do in the entire rest of the world, like Canada, where they don’t need to separate “banking” from other financial services, then you don’t have a problem. Leverage is the problem. The rest of the world proves the point.

  5. Global Eyes says:

    Bush 41 pontificated over the demise of the entire Savings & Loan industry while Bush 43 presided over the collapse of the mortgage industry. Glass Steagall would have prevented both. I think
    President Obama is a victim of a deliberately-planned conspiracy plot.

  6. Greg0658 says:

    “Corporations can exist forever” * .. was ringing in my ear as I started reading that ..
    more bits .. employ specialists in every discipline needed to market make .. able to use other peoples money ie: in the direct investment carrot (our rules for principle+ repayment) and opm by provide’g what we all need to survive on this planet

    corporations are more powerful than ‘we the people’ forever more .. dealers of Air

    * nothing can last forever – “for Nature cannot be fooled”

  7. jolietjim says:

    Barry, it is so boffo to see you not start your column with a boring list of things you are reading today.If you must publish a list, we’d much prefer something like “Monday Eats” to let us know what you are eating.

    As for the G-S stuff. Great reporting. Didn’t realize how long the rats had been nibbling on it. And how much they gobbled up.

    Now about Obama. He’s from Chicago. And the boys don’t put nobody on the ticket they don’t own. Remember, they’re the gang that ran Rod Blagojevich as a reform candidate for Governor.

    Since the banks and Chicago were the reason Obama got into the White House, it is not surprising that he has done nothing about financial reform.

    “I know both those guys [Blankfein and Dimon]. They are very savvy businessmen.”

    They certainly are.

  8. Mike in Nola says:

    Obama deserves to be only a one term president but we don’t deserve the alternative. If the alternative gets in, stock up on catfood; the price will go through the roof.

  9. Fred C Dobbs says:

    The beginning of the end was permitting the establishment of ‘holding companies’ in the ’60s. The professed reason for creating holding companies had something to do with the fact that some state laws fixed some sort of financial responsibility on shareholders if a bank or s&l failed. To sell a stock on the NYSE and elsewhere, the stock had to be ‘fully paid and non-assessable,’ and, as a result, these entities were denied access to capital markets, and had to grow their capital to keep pace with growth in deposits and maintain minimum capital ratios from internal operations, a slower way to go. So holding companies that were prohibited by the ’30s legislation were allowed to sell their stock on the NYSE being fully paid and non-assessable opened the door a crack to permit faster grow and please Wall Street Underwriters. At first the holding company could only own 100% of a federally-insured depositary institution and could only send the capital they raised downhill to the regulated subsidiary. And many went to a friendly bank, and borrowed money in the holding company name, and bought a bank. Leon Levy and partners, for example, bought 4 s&ls in California and Arizona through 4 holding companies. When the holdinnd g companies defaulted on their bank loans, however, the lenders who had taken 100% of the subsidiary depositary institution stock as security found they couldn’t ‘foreclose’ because no one could buy a depositary institution without first being ‘vetted’ by the regulators and they wouldn’t give ‘hypothetical’ or ‘advisory opinions,’ and the process of complying with Change in Control Act regulations took months in any event. This fly in the ointment did not deter growth in holding companies because few loans to holding companies were called. As holding companies discovered they were basically regulated only to the extent they interfered in the management of their subsidiary (one of the arguments for holding companies was based on the assumption the holding company management would not interlock with the management of the regulated subsidiary, and merely be a passive shareholder), in other words, free to engage in active business, they added other subsidiaries such as insurance agencies and companies to sell credit and homeowner insurance to their more or less captive borrowers. Then escrow and title insurance subsidiaries became popular. Then mortgage companies. etc. Gradually, Wall Street realized that companies like Ford Motor Co could own a bank or s&l, and Merrill Lynch could too etc. I am generalizing about a growth and change in thinking that began in the ’60s with BofA being the first bank to forming a company to hold itself, and am stopping for now at 1978 or so when the first non-bank banks were first authorized. Much of the innovation and watering-down of law and regulations began in California which needed desperately to find ways to import capital from the non-growing or slow-growing Northeastern States to fund growth. If you want more, ask.

  10. Seaton says:

    Global Eyes & Mike have it right–we don’t deserve the alternative, ’cause we’ve seen that the alternative is a continued diminishing of the individual’s human/citizen rights with the realm of our American Capitalism. Instead, the Corporatocracy that is now firmly in control of the House & Senate & to some degree the White House will not consider, “Wallace, the night watchman at the local factory, his needs by government” first. They don’t speak for him, but it’s possible Obama does. (Show me his successful lobbyists, versus BAC,JPM,BA,etc.) It’s possible, isn’t it, that the Republican Party has fought as vociferously and more successfully the current Administration’s agenda as the Democrats did & didn’t fight GWB-43′s agenda. Walk it backwards, the “tit-for-tat” seems obvious. Worse still, sound economics has been corrupted up badly by political exigencies desired by the various proselytizers. Glass-Steagall may not be the Holy Grail, but I’ll wager you’ll see some semblance of it re-enacted by the current Administration & it’s re-election than you will with a Romney-Boehner-Ryan-McConnell Administration swept in. It’s economics be damned, sound banking principles watered down every chance possible, etc. Hard to re-establish one’s good honor when so thoroughly & repeatedly stained.

  11. louis says:

    Obama is a victim my ass, he has the same team that oversaw the fraud to begin with. He had his chance to take another path.

  12. cewing says:

    It won’t be Obama’s legacy that will be tarnished by Glass Steagall, it will be Bill Clinton’s, since he signed the bill that ended it. That decision is turning out to be the second most disastrous act by a President in modern history (George W. Bush invading Iraq being the worst).

    Obama has missed a lot of other chances to do a lot of other things, Glass Steagall being only one of them. He still won’t lose to Mega-Millions Mitt, though.

  13. MorticiaA says:

    Like many here I, too, am frustrated that President Obama is captured by the same group as were his predecessors.

    However, Romney is sure to make it worse. Another point is the voting masses: as long as sh*t isn’t hitting the economic fan on election day, they won’t give financial reforms any thought.

  14. 873450 says:

    My initial reaction upon first seeing Paul Volcker, at 6 ft 8 in and 80+ years old, sitting at the children’s table and ignored by Obama’s poorly chosen financial advisors, was to think, “There’s something wrong with this picture.”

    Reflecting back on that disturbing image today, the word “wrong” cannot begin to describe Obama tragically squandering away his opportunity to rectify TBTF and reform the dysfunctional, out of control banking system ripping apart our economy.

    Obama squandered away.

    that disturbing image. weren’t just “wrong” isn’t the right word

    ominous and tragic

  15. rallip3 says:

    I am amazed that there is so much focus on Glass-Steagall; the big problem is the mortgage market which led to S&L failures in the early 1990s and the securitized mortgage problems of 2007-?12; what is needed is not a reintroduction of Glass Steagall but a better iteration of securitized mortgages (think German Pfandbriefen).
    There won’t be a decent recovery till the US gets housing finance back into shape for both borrowers and lenders.

  16. wally says:

    “…and could be the reason it may be a single term.”
    That’s an odd speculation to include in the post. Why would you think that a sufficient number of voters is even aware of the whole issue, let alone willing to base their vote on it? Or that they would think Romney is a better, not worse, person to get the big banks under control?

  17. CB says:

    A telling history lesson BR -thanks.
    Also consider the consumer financial protection bureau (CFPB) was created largely due to effects from:
    the repeal of Glass-Steagal, passing of Competitive Equality Banking Act, Commodities and Futures Modernization Act, Bankruptcy Reform act, creation of MERS, and a general non-enforcement of most financial regulations originally designed for a balance between consumer protection/service and financial corp profit. Yes indeed – corporate lobbying since the 80′s has succeeded in regulatory capture and radical de-regulation under the guise of modernization, competitiveness and free markets. For individuals the “invisible hand” of the “free market” is just corporate lobbyists giving you the finger.

  18. CONGRESS PASSES WIDE-RANGING BILL EASING BANK LAWS
    Published: November 05, 1999

    Congress approved landmark legislation today that opens the door for a new era on Wall Street in which commercial banks, securities houses and insurers will find it easier and cheaper to enter one another’s businesses.

    The measure, considered by many the most important banking legislation in 66 years, was approved in the Senate by a vote of 90 to 8 and in the House tonight by 362 to 57. The bill will now be sent to the president, who is expected to sign it, aides said. It would become one of the most significant achievements this year by the White House and the Republicans leading the 106th Congress.

    ”Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century,” Treasury Secretary Lawrence H. Summers said. ”This historic legislation will better enable American companies to compete in the new economy.”

    The decision to repeal the Glass-Steagall Act of 1933 provoked dire warnings from a handful of dissenters that the deregulation of Wall Street would someday wreak havoc on the nation’s financial system. The original idea behind Glass-Steagall was that separation between bankers and brokers would reduce the potential conflicts of interest that were thought to have contributed to the speculative stock frenzy before the Depression.

  19. louis says:

    Deregulation became the vision, competing internationally became the slogan, and the US Senate had lunch brought to them by Chase and Credit Sussie.

  20. mathdock says:

    @global eyes: The current president is a victim of an electorate who ignored his complete lack of experience and therefore put him in the position of placing his mistaken reliance on a cadre of insider advisors who had created the conspiracy which you note he quietly acceded to. Now isn’t THAT some sentence!

  21. Julia Chestnut says:

    @AHodge, 10b-5 was gutted, but so were corporate governance laws that used to protect shareholders. The right to undertake class actions has also been seriously hobbled. All of these, acting together, create an environment where what used to serve as “checks and balances” on centralized corporate power and managerial looting no longer function – but still exist on the books, so that courts and legislators can point to them as adequate controls.

    Barry, thank you for a long and sordid autopsy of what happened to an important protection born of solemn realization and great suffering. The past few days have been rife with the sorts of insights and discussions I love about TBP.

  22. mathdock says:

    Barry,
    …so when have you picked up the very gauche schtick of opening a post with the word “so”? I remember when it began to be popular among the TV cognoscenti to indicate they hadn’t stopped talking from the last time they were interviewed. Now, even the rank amateur “guest” has adopted bizspeak.

    I also remember, back in the 80′s, a brilliant prof on my dissertation committee who began every lecture with “so”, but in his case, it was perfectly appropriate–he was continuing his point from the last lecture. It still was a hoot.

    Well, I guess it’s better than beginning your post with an “Uhhhh”, “Errrrrr”, or some similar barbarism….

  23. 873450 says:

    messed up the edit:

    Obama failing to rectify TBTF defaulted his re-election campaign to predictions a repeat financial catastrophe will result if the electorate delivers the White House back to those responsible for driving us into a ditch.

    Instead, Obama urges Americans to vote for a guy who can’t pull us out of the ditch.

  24. ComradeAnon says:

    What do you think? That around 2033 another Glass-Steagall will come around? Nah, won’t take that long.

  25. digistar says:

    I’ve seen this movie at the local level.

    Concerned citizens organize to get the City to establish a building ordinance to protect said citizens from the selfish and even dangerous practices of developers. After much effort, an ordinance is passed. Voters rule.

    The citizens return to their regular pursuits.

    The developers begin to chip away at the ordinance. Campaign contributions and the good old boy network erode or bypass the ordinance over time. Developers rule.

    Years pass, things get bad for the citizens again. Cycle repeats.

    ——————–

    Obama blew his chance. He could have rammed Great Depression style reforms through. He’s not a leader, he’s a yes man for the rich and powerful. He wants to get into their club after graduating from government ‘service’.

  26. MorticiaA says:

    @digistar: “He wants to get into their club after graduating from government ‘service’.”

    Nail hit directly on its head.

  27. aleealee says:

    I’m tired of hearing how Romney is going to be worse than Obama. Who predicted Obama, the Democrat, was going to worse than Bush on so many things (habeus corpus, drones on U.S. soil, NDAA, etc)? Surely not those who thought he was going to be ‘awesomer’ than Hillary. Every politician is going to have their differences but if recent time doesn’t show that the worse one’s are the one’s bought and paid for by the big Corporations, I don’t know what will. I don’t know what particular policies Hillary or McCain would have been better on than Obama other than the ones they’d championed throughout their respective careers, but campaign financial disclosures and desire for public financing and the transparency that goes with it indicates that they weren’t bought during the election.

    What’s that you say? ‘They would have been sooner or later”. Their you go with the prognosticating again.

  28. aleealee says:

    ‘to be worse than Bush’…

  29. jimc1004 says:

    I am a big fan of Barry’s daily reads.

    In a lot of stuff related to cars and the environment I am NOT a big fan of five decade Congressman John Dingell (D-Mich.), but on this topic he was 100% right:

    From http://www.politico.com/news/stories/0908/13887_Page2.html [09/25/2008]:

    Rep. John Dingell (D-Mich.), whose father helped write Glass-Steagall in the 1930s, saw it in clearer terms. “The banks had been working on it for 40 — no, hell no — since it was enacted, the banks have been trying to get rid of it,” said Dingell, chairman of the Energy and Commerce Committee. “They worked like hell. They finally wore this place down. Everybody forgot what happened during the Depression and why Glass-Steagall was passed.”

    Dingell did what he could to persuade his colleagues before the vote to deregulate.

    “[W]hat we are creating now is a group of institutions which are too big to fail,” he said then in words that sound unusually prescient now. “Not only are they going to be big banks, but they are going to be big everything, because they are going to be in securities and insurance, in issuance of stocks and bonds and underwriting, and they are also going to be in banks.

    “And under this legislation, the whole of the regulatory structure is so obfuscated and so confused that liability in one area is going to fall over into liability in the next. Taxpayers are going to be called upon to cure the failures we are creating tonight, and it is going to cost a lot of money, and it is coming. Just be prepared for those events.”

    Dingell’s 1999 speech before Congress arguing against repeal can be found here:

    http://youtu.be/y2RzRv8yQXQ

    Another part of this sordid caper was the excuse given for getting rid of G-S: If we don’t do it then the exchanges in Europe [UK], or Asia will do it and all the business, and profits will go there!

    “The City” [London] seems to have even more of a lawless environment than Wall Street, both before the repeal and after: See Liar’s Poker, Barings Bank, … AIG-FP, and current [and growing, anyone surprised?] losses at JPM.

    Certainly, Obama relied too much on people who were connected to the Global Financial Crisis, from Bernanke and Geithner, to Summers, but where is the Ferdinand Pecora, or Senator Carter Glass, or Representative Henry B. Steagall of today? Dodd-Frank? Puleeze! Obama couldn’t even get Elizabeth Warren confirmed for the Consumer Protection bureau due to the T-Party-Republican insurgents who have made less radical GOP members in Congress vote against even their OWN bills, again and again, if Obama says he even likes their ideas.

    The biggest helper from business Obama has had has been Buffett, but he and Volcker are both getting kind of old for the kind of grind that kind of DC job entails, so they were never going to do a Joe Kennedy and run the SEC!

  30. SteveC says:

    People who are not from the financial industry don’t get the inner workings of WS. I think Obama’s main mistake was trusting two insiders to help formulate his policy. IF he gets a second term, I hope he finds a different brain trust. Barry R., are you busy the next few years?

  31. Futuredome says:

    Sorry, but Obama was a 3rd wayer, no matter what you want to believe. He may have been a “liberal” at one time, but they are not leftists either. Amazing people fall for that Republican bs.

    This is the problem people seem to have. If the banks fail, the peoples money is destroyed, the destroyed money equals a destroyed economy, it is will be chaos, anarchy and riots. The same “tea party” idiot will find his so called “safe bank” destroyed, poor destitute and worthless. His blueprint for life destroyed.

    Romney is in a no win situation. He comes in and the economy tanks on him. The Democrats main 3 elders(Astor,Kennedy and Renyolds) turn against liberalism and instead support national socialism. A downtrodden “ex-Republican” base has been destroyed. They are shellshocked. So comes in the Democrats “Goldwater” and purifies the base: Will tax the wealthy heavily, overhaul the entire infrastructural base, national health care, breaking up of corporate america, arrest and execution of capitalists, major anti-immigrant policies mostly against LEGALS, invasion of Mexico. The white proletarian will be the main beneficiary ala the New Deal.

    The Republican party will be destroyed. Simply destroyed. Romney is a awful candidate and you know why.

  32. egreen711 says:

    Cause and effect, is, as usual muddled and backward in the minds of economists and business men.

    The first question is what led to Glass Steagall? Was it enacted over the objections of the banks? Of course not. The banks needed to reassure the public and entice them to take their money out of their mattresses and put it back in the bank. Glass Steagall was part of the reassurance, the idea that banks would no longer gamble with depositors money. Of course, that wasn’t enough to instill trust. So, the banks got the government to guarantee deposits. It was essentially a Republican bill worked out under Hoover. Roosevelt’s Treasury Secretary at the time was a Republican who came out of the Hoover administration.
    What changed in the 1960s was not the law, but the turn in the business cycle. As the post-war recovery and expansion began to lose steam, as corporate profits on production fell, business began to look more and more to non-productive investments to make money — that is, speculation. So, just as government officials had served the banks recovery by issuing Glass Steagall and deposit insurance, they then facilitated the continued speculation and increased profits by changing the laws and regulations to make everything legal.

  33. AHodge says:

    julia could not agree more on long corporate governance list
    both what was gutted plus otherwise needed
    includes fiduciary, liability, compensation, shareholder rights and bankruptcy treatment of financial assets– they get a complete pass from bankruptcy now and first claim WTF
    delaware corp law? how bout south dakota or national???
    also enforcong whats there as the SEC now is a do over
    keep up the good work!

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