Sixteen years after the repeal of Glass-Steagall, we must reflect honestly about the past to protect the American people from future financial crashes: November 12, 1999 marked the effective repeal of the Glass-Steagall Act, the law put in place after the Great Depression to separate traditional, commercial banking from higher-risk investment and trading firms. It protected the American people for more than 60 years, until Wall Street worked with its allies in Washington to repeal the bill as part of a larger deregulatory push.

An editorial by President and CEO Dennis Kelleher outlines the importance of taking this milestone as an opportunity to learn the lessons of the past while working to protect the American people from future devastating financial crashes:

“While the 2008 financial crisis almost certainly would have occurred if Glass-Steagall had remained in place, its repeal greatly aided the spread of the disaster throughout the financial system and broader economy. Unfortunately, there’s been too little willingness by those on Wall Street and in Washington to admit this mistake (and others) or, more importantly, to allow the facts to guide our efforts to prevent another financial crash.”

John Reed, the former chairman and chief executive of Citigroup, which was made possible by repeal of Glass-Steagall and the subsequent merger of Citicorp and Travelers Group, is an important exception. He’s done a lot of important reflection on this as he outlines in a must-read op-ed titled We Were Wrong About Universal Banking:

“As is now clear, traditional banking attracts one kind of talent, which is entirely different from the kinds drawn towards investment banking and trading… This creates fundamental differences in values. As I have reflected about the years since 1999, I think the lessons of Glass-Steagall and its repeal suggest that the universal banking model is inherently unstable and unworkable. No amount of restructuring, management change or regulation is ever likely to change that.”

Voters in both parties support Wall Street reform because they know that we cannot afford a repeat of the 2008 financial crash, which caused an economic calamity from coast to coast and diverted trillions of dollars from many important issues like education, health care, infrastructure, research and development, and so much more. Reinstating Glass-Steagall won’t solve too-big-to-fail or prevent future crashes by itself. It can, however, be an important part of an overall plan to reduce the risk on Wall Street while increasing the protections for Main Street.

It is important to remember that financial reform and protecting the American people from another crash and economic calamity are about more than just a modern day Glass-Steagall. But, that has become a shorthand way to talk about the broader issues, as we have seen  on the campaign trail. Voters deserve a thoughtful, fact-based discussion related to Glass Steagall and financial reform more broadly from every candidate who wants to be President. Each should clearly outline their position on reinstating a Glass-Steagall-like law and/or their other specific, concrete and comprehensive proposals to protect America’s hardworking families and take them off the hook for future bailouts.

Lawbreakers and wrongdoers should no longer serve on the SEC’s Equity Market Structure Advisory Committee: As Better Markets has documented, the SEC’s Equity Market Structure Advisory Committee, which was created earlier this year to bring together experts to examine the many problems with our equity markets and ensure they’re functioning effectively for the American people, is unbalanced, one-sided and dominated by industry representatives that have huge, billion dollar interests in preserving the current status quo. Unbelievably, a number of members are affiliated with firms that have violated the very laws that the committee is supposed to review and ensure are working.

In a new editorial in American Banker, Mr. Kelleher outlines how at least three of these firms — Investment Technology Group, Convergex and Barclay’s PLC — have been implicated in serious wrongdoing, including market structure, dark pool and high-frequency trading violations, writing:

“Those aren’t the values the American people expect from members of a committee designed to look out for their interests. Confidence in our markets has already been weakened by years of industry scandal and unexplained stock market crashes that have exposed deep and dangerous fault lines in our markets and regulatory structures. We cannot trust an industry-dominated body — especially one that includes firms implicated in malfeasance — to restore public trust in our markets.”  

“That’s why the SEC should immediately remove the representatives of these three firms from the committee and reconstitute it with a majority of members who are focused on the public interest. Industry input and participation on the committee will remain essential. But there are plenty of people and firms in the industry who play by the rules, serve their clients and don’t break the law. It’s not too much to ask that the SEC put them on the committee.”

You can read the full piece, Special Interests Dominate SEC Trading Advisory Panel, here. 

Better Markets in the News:

Special Interests Dominate SEC Trading Advisory Panel: American Banker by Dennis Kelleher 11-13-2015

The Lessons of Repealing Glass Steagall: Huffington Post by Dennis Kelleher 11-11-2015

Glass-Steagall Takes Center Stage in 2016: The Hill by Peter Schroeder 11-12-2015

News You Don’t Want to Miss:

Surge in Subprime Auto Lending Draws Attention: Wall Street Journal by Josh Zumbrun 11-19-2015

Plan for New Stock Exchange Stirs Furious Debate: New York Times by Nathaniel Popper 11-16-2015

We Were Wrong About Universal Banking: Financial Times by John Reed 11-11-2015

Why GOP Debate Was a Bad Sign for Big Banks: American Banker by Victoria Finkle and Rob Blackwell 11-11-2015