State Reps. Michael Sheehy (D-Oregon) and Dan Ramos (D-Lorain) this week introduced a resolution calling for the reinstatement of the Glass-Steagall Act, the core provisions of the federal Banking Act of 1933, to improve transparency and stability in the financial sector.
“At a time when our state and nation are amidst a fragile recovery from the Great Recession, as far too many communities simply have not recovered yet, it is incumbent upon us to action to ensure this never happens again,” said Ramos. “We owe it to our constituents, the American taxpayers, to ensure that their tax dollars are being utilized to create opportunities for the public, not just a handful of wealthy Wall Street opportunists.”
Passed during the Great Depression, the Glass-Steagall Act separated commercial and investment banking for over 60 years until its provisions were repealed by Congress in 1999. Many believe the repeal of the Glass-Steagall provisions led to a rise in the type of speculative banking activity that contributed to the financial crisis of 2008-09.
Restoring the Glass-Steagall Act protections has garnered widespread national support from prominent economic and business leaders and national publications, including Thomas Hoenig of the Federal Deposit Insurance Corporation, former Citigroup CEO Sanford Weill, economist Luigi Zingales, the New York Times, the St. Louis Post-Dispatch, and the Los Angeles Times.
“I believe we must reinstate commonsense regulatory reforms that were originally put in place to protect working families from economic catastrophe,” said Sheehy. “We have seen the devastation that occurs when the incentive for banks to take risks is too high. Restoring the Glass-Steagall provisions will help prevent another Great Recession from undermining Ohio families and businesses.”
On the federal level, U.S. Representative Marcy Kaptur (OH-9) has introduced H. R. 381, known as the Return to Prudent Banking Act of 2015, which would revive the separation between commercial banking and the securities business. U.S. Senator Elizabeth Warren, along with Senators John McCain, Maria Cantwell, Angus King, and others have introduced the 21st Century Glass-Steagall Act (S. 1709), aimed at reducing risk for American taxpayers in the financial system and decreasing the likelihood of future financial crises.
Similar resolutions demanding action to restore Glass-Steagall protections have been introduced in at least 25 states since 2013.