Senator Elizabeth Warren said a bipartisan group of U.S. lawmakers will introduce legislation aimed at separating commercial and investment banking, recreating a Depression-era firewall established by the Glass- Steagall Act but repealed in 1999.
“Despite the progress we’ve made since 2008, the biggest banks continue to threaten the economy,” Warren, a Massachusetts Democrat, said today in an e-mailed statement. The measure would “make our financial system more stable and secure, and protect American families.”
The legislation is also sponsored by Senators John McCain, an Arizona Republican, Maria Cantwell, a Washington Democrat, and Angus King, an independent from Maine who caucuses with the Democrats.
The bill aims to separate traditional banks that offer checking and savings accounts insured by the Federal Deposit Insurance Corp. from “riskier financial institutions” that work in investment banking, insurance, swaps dealing, hedge funds and private equity, according to the statement.
McCain, a former Republican presidential candidate, said the measure is needed to protect taxpayers and restore confidence in the financial system.
“Since core provisions of the Glass-Steagall Act were repealed in 1999, shattering the wall dividing commercial banks and investment banks, a culture of dangerous greed and excessive risk-taking has taken root in the banking world,” McCain said in the statement.
Previous Senate attempts to revive Glass-Steagall have failed to gain adequate support to become law.
“Based on what the regulators did to Glass-Steagall over the last 30 years, I don’t expect anyone on this panel will jump and endorse the new Glass-Steagall bill,” Warren said at a Senate Banking Committee hearing today. “Even so we’re going to keep pushing for it.”