Bankruptcy

Glass-Steagall Act ? Should the Repeal be Repealed?

By writer

According to the Congressional Research Service of the Library of Congress:

During the Great Depression, Congress examined the mixing of the ?commercial? and ?investment? banking industries that occurred in the 1920s. Hearings revealed conflicts of interest and fraud in some banking institutions? securities activities. A formidable barrier to the mixing of these activities was then set up by the Glass Steagall Act.

Some action was definitely needed, because nearly 25% of formerly working individuals were unemployed. The number of banks that failed or that had been forced to merge was approaching 40%.

Congressional hearings conducted in 1933 apparently demonstrated that bankers and brokers, ?leaders of the American economy?, were guilty of disreputable and dishonest dealings and gross misuses of the public’s trust. Shocking isn?t it!? How could that have happened?

Fast forward 66 years — 1999 saw the repeal of the Glass-Steagall Act by Republican Senator Bill Gramm and Republican Congressman Jim Leach. After passing both Houses of Congress by their Republican majorities, the legislation was signed into law by (an eager) President Bill Clinton. It is important to note, for the sake of political fairness, that the Democrats were just as much in favor of this as the Republicans.

Some experts feel that the repeal of this law eventually led to the global financial crisis of 2008-2009. Others, however, have stated that the flexibility allowed by the repeal of this law actually prevented the failure of some American banks.

Obviously there is no way to know exactly how our present-day depression, I mean recession, began or how or when it is going to ease. What is known is that the country?s unemployment figures are inching toward 10% with some economists predicting that numbers closer to 15% are quickly approaching. Banks and investment firms are closing, merging or filing for corporate bankruptcy protection.

These statistics are troubling for everyone. It?s still uncertain as to when economic conditions will improve and whether or not they are going to get worse in the coming months. If you?re already being staggered by debt, you may need to take action right now. Contact a Legal Helpers attorney. We focus on bankruptcy cases every day, and can help you find the right solution for you. Contact us today.

Full post as published by Consumer Bankruptcy Blog from Legal Helpers on July 27, 2009 (boomark / email).