In May, the International Union of Bricklayers and Allied Craftworkers endorsed the reinstatement of the Glass-Steagall Act of 1933, as provided for in H.R. 1489, "The Return to Prudent Banking Act." The following letter was sent May 22, to Rep. Marcy Kaptur (D-Ohio), the originating sponsor of H.R. 1489, by James Boland, President, International Union of Bricklayers and Allied Craftworkers.
Date: May 22, 2012
To: Rep. Marcy Kaptur (D-Ohio)
On behalf of the International Union of Bricklayers and Allied Craftworkers, I write to express our support for your legislation, H.R. 1489, "The Return to Prudent Banking Act."
Because of the Dodd-Frank Act of 2010, we now have a foundation to rebuild our country's financial sector and bring accountability to Wall Street. However, despite well intentioned efforts, Dodd-Frank did not adequately address financial institutions that have become "too big to fail." Attempts to place proprietary trading restrictions on big banks were put in place, yet these efforts only scratched the surface on what is needed to narrow the scope of institutions that are powerful and threaten the crumbling economy if they were to ultimately fail.
Enacting H.R. 1489 in combination with simultaneous efforts to address other banking regulations and laws would further strengthen our financial system by reinstating Glass-Steagall Act of 1933. Glass-Steagall established three areas of financial activity: commercial banking,investment banking, and insurance. As a result of Glass-Steagall, no single company could be both an investment bank and a commercial bank. Glass-Steagall was intended to protect against potential conflicts between the function of protecting personal deposits, the insurance function and speculative investment activity.
This structure worked for decades and proved to be an effective way of limiting the systemic risks posed by too big and too interconnected to fail financial institutions. However, in 1999 the Gramm Leach Bliley Act repealed Glass-Steagall and unwisely allowed for the creation of large banks that were no longer subject to the safeguards that Glass-Steagall held in place. The removal of these safeguards arguably resulted in the beginning of our most recent financial collapse.
Our financial markets were ultimately exposed to an insurmountable amount of risky behavior by these large financial institutions and we must now limit the potential for further economic collapse by restoring safeguards once held in place by Glass-Steagall. H.R. 1489 , the Return to Prudent Banking Act would do just that.
We thank you for your leadership on this issue and look forward to your continued support.
--James Boland, President
International Union of Bricklayers and Allied Craftworkers