“Secretary Clinton says that Glass-Steagall would not have prevented the financial crisis because shadow banks like AIG and Lehman Brothers, not big commercial banks, were the real culprits. Secretary Clinton is wrong. Shadow banks did gamble recklessly, but where did that money come from? It came from the federally insured bank deposits of big commercial banks — something that would have been banned under the Glass-Steagall Act.”
“— Democratic presidential candidate Sen. Bernie Sanders (Vt.), speech on Wall Street and the economy, Jan. 5, 2016”
“Our goal here is not to re-litigate the 1999 legislation’s role in the Great Recession. Each side can muster experts to make their case, though in general we would note that few economic crises (like plane crashes) are the result of one single factor; there is a risk in overemphasizing one reason above others. Even Sen. Elizabeth Warren (D-Mass.), who favors reinstalling a version of Glass-Steagall, has acknowledged that crisis probably could not have been avoided if Glass-Steagall had been in place. (The Sanders campaign likes to cite this analysis blaming Glass-Steagall by the regulatory reform group Better Markets.)”
Read the full Washington Post article by Glenn Kessler here.