October 07, 2013

We want the SPIRIT of Glass-Steagall back

Leave it to Andrew Ross Sorkin, an untrustworthy insider in the NY-to-DC axis, to set up the straw man that progressives who fear the banksters and too-big-to-fail banks want a literal reinstatement of the exact Glass-Steagall Act. Leave it to one of his Dealbook buddies to pass this on without critical review, in a story noting what I already know, that Janet Yellen ain't that much more progressive than Big Ben Bernanke.

Of course, if the original Glass-Steagall doesn't cover some aspects of banking today, I want something better and stronger, like a Tobin tax that I am sure Sorkin would oppose. (To the degree "regulatory capture" is true, it still can't be more than half as true as "media capture.")

I will give Sorkin credit for reporting Sen. Elizabeth Warren's statement that its repeal set up a new mindset on both Wall Street and its regulators, and for noting just what G-S redux wouldn't have addressed. But, he fails to follow up on Warren's "mindset" comment, and how that still plays out today. In fact, he exhibits, to some degree, that exact mindset.

Because Warren, Berksley Born and many other people have never said that a simple reinstatement of G-S is a cure-all. A Tobin tax, higher marginal requirements on banks, and elimination of liar's loans, along with Born's long-ago plea for full-blown derivatives regulation, going into the larger financil world, would address a lot of problems.

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