United States Senate
Washington, DC 20510
Re: Support Cantwell McCain #3884 which restores the Glass-Steagall Act’s key safeguards
The over 200 consumer, employee, investor, community and civil rights groups who are members of Americans for Financial Reform write you today to convey the coalition’s strong support for the Cantwell-McCain Glass-Steagall Amendment, #3884.
Ten years ago, the Glass-Steagall Act of 1933 that once separated commercial banks from investment banks and insurance companies was repealed, after years of erosion by regulators, courts and Congress. The result was substantial growth in the size, complexity and risk profile of the nation’s largest financial institutions, which could, for the first time since the Great Depression, combine traditional banking with speculative activity.
The 2008 financial crisis revealed the short-sightedness of the repeal of these protections, which had kept our financial system stable for 60 years. Banking, insurance and investment firms merged, becoming too big to fail and too complex to manage. While much of damage was wrought by pure investment banks such as Bear Stearns and Lehman Brothers, commercial banks played a crucial role as buyers and sellers of mortgage-backed securities, credit-default swaps, and other explosive financial derivatives, which were packaged and sold around the globe. Commercial banks were able to do this because the Gramm-Leach-Bliley Act (1999) allowed them to form investment banking subsidiaries and authorized an expansion of non-deposit funding to support their off-balance sheet activities such as proprietary trading and derivatives dealing.
Cantwell- McCain Amendment #3884 reestablishes the wall between commercial banks and risky securities activities. The American people have paid an incalculable price for the casino-style securities trading that was allowed to flourish on Wall Street. It is time to rebuild the wall between Main Street banks and Wall Street gambling for the protection of every American.
Americans for Financial Reform