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By Marc Lackritz
Published: January 14 2010 20:07 | Last updated: January 14 2010 20:07
Senators John McCain and Maria Cantwell have introduced bipartisan legislation to reinstate a version of the Glass-Steagall Act, the Depression-era reform that separated commercial banking from investment banking. Mr McCain and Ms Cantwell thus join a very distinguished group of reformers, led by the estimable Paul Volcker and other notables including Nicholas Brady, the former Treasury secretary.
This group traces the origins of the current crisis to Glass-Steagall's 1999 repeal, and would once again separate the "safe and predictable" activity of taking deposits and making loans from "risky" underwriting, trading and hedging. The new financial sobriety reflected in this proposal sees risk as the cause of the current crisis, if not the nastiest four-letter word in the English language.
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