To the editor:
It saddened me to hear that John Tierney has decided to jump on the populist bandwagon and support John McCain and Elizabeth Warren’s proposal to reintroduce a version of the Glass-Steagall Act of 1933 (”Tierney bill designed to curb big banks,” Dec. 12). Our representatives seem more concerned with sticking it to big, bad banks than preventing future financial meltdowns.
The main issue with blaming the financial crisis on “too big to fail” and deregulation is that the United States was alone in separating commercial and investment banking for decades until the original act was repealed by a bipartisan Congress in 1999. European countries and Canada have never had any such regulation doing this. Most telling is the fact that Canada had exactly zero bank failures between 2007 and 2010, compared to 196 in the U.S.
There are major problems with the U.S. credit market, but the integration of commercial and investment banking is not one of them, and changing this will do nothing to prevent future crises. Instead of trying to score cheap electoral points, perhaps Tierney should take the time to really examine the factors that led to the financial crisis under his tenure in Congress.