Forum Post: Obama " It is important to remember that Glass-Steagall would not have prevented the most dramatic failures in 2008.
Posted 3 years ago on March 7, 2012, 9:53 a.m. EST by paulg5
This content is user submitted and not an official statement
A Comprehensive Approach to Wall Street Reform By Brian Deese, Deputy Director of the National Economic Council
In the wake of the worst financial crisis since the Great Depression, the President took on fierce lobbying and put in place some of the most sweeping financial reforms in history. These reforms were comprehensive and aimed at solving problems in our system exposed by the financial crisis. The President is fighting daily against special interests who want to roll back, delay, defund, and dismantle these reforms. Wall Street Reform did many things, including protecting and empowering consumers, and bringing transparency and oversight to previously unregulated and opaque markets and institutions. The Administration chose not to simply re-establish the Glass-Steagall separation between commercial banks and investment banks and opted instead for more comprehensive reforms for several reasons: Simply going back to Glass-Steagall would not have solved the failures of our modern financial system or prevented the financial crisis that led to the worst financial crisis in our lifetimes: It is important to remember that Glass-Steagall would not have prevented the most dramatic failures in 2008. Glass-Steagall would not have avoided the problematic activities of the institutions that defined this financial crisis -- Fannie and Freddie, Bear Stearns, Lehman Brothers, AIG, and Countrywide. What was required was a more comprehensive set of reforms to solve the roots of our crisis. As the President explained in his State of the Union address: "I will not go back to the days when Wall Street was allowed to play by its own set of rules. The new rules we passed restore what should be any financial system's core purpose: getting funding to entrepreneurs with the best ideas, and getting loans to responsible families who want to buy a home, or start a business, or send their kids to college." In particular, the "Volcker Rule" that the President fought to include in Wall Street Reform goes more directly at some of the risky behaviors behind the recent financial crisis. The Volcker Rule will ban banks from making risky bets when they're dealing with their customers' deposits. And Wall Street Reform goes further by: Creating a single consumer watchdog agency whose sole job is looking out for working families by protecting them from deceptive and unfair lending practices of mortgage brokers, payday lenders, and debt collectors. Requiring banks to hold more capital so that when they make a bad bet they pay for it, not taxpayers. Preventing any financial company, like AIG, from posing such risk to our economy that we have no choice but for taxpayers to bail them out. We're doing this by forcing them to write in detail how, if they fail, they'll pay the bills; we're putting limits on the size of banks; and we're giving regulators an ability they've never had before to dismantle failing firms without sticking taxpayers with the bill. Increasing transparency by bringing the $600 trillion derivatives market -- which was at the center of the financial crisis -- and other trading out of the shadows. Holding CEO's accountable by taking back bonuses and compensation from failing CEOs, giving shareholders a voice on CEO pay, and protecting whistleblowers who speak out about wrongdoing on Wall Street. Thank you for signing the petition "Re-establish and maintain the separation between investment banks and commercial banks" and for your participation in the We the People platform. Check out this response on We the People.