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Presidential Issues: Finance & Banking

Finance & Banking

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Glass-Steagall Is a Debate Democrats Don’t Need

October 14, 2015

By Paula Dwyer

Democrats have gotten themselves entangled in a nasty, complicated and ultimately unnecessary debate over an obscure financial law that Congress repealed 16 years ago.

The debate boils down to this: Did the elimination of the 1933 Glass-Steagall Act, which erected a firewall between commercial and investment banking, cause the 2008 financial crisis?

In Tuesday night's presidential debate, Bernie Sanders and Martin O'Malley said yes; Hillary Clinton said no.

The Democratic base appears to side with Sanders and O'Malley, whose intellectual guru on this issue is Joseph Stiglitz, the Nobel Prize-winning economist, and whose most vocal proponent is Senator Elizabeth Warren. To them, the return of Glass-Steagall, originally adopted in the Depression after the 1929 stock-market crash, would mean busting up the big banks.

Many Democrats seem to read into Clinton's rejection of that solution a cynical attempt to keep her Wall Street donors happy. They also believe she is trying to protect the legacy of her husband, on whose watch Glass-Steagall was withdrawn in 1999.

Read the full article at Bloomberg View: Glass-Steagall Is a Debate Democrats Don't Need