Panicked U.S. Financial Circles Find Themselves Discussing Glass Steagall
June 8, 2012 • 7:34AM

Bloomberg TV on June 5th interviewed two supporters of restoring the Glass-Steagall principle, former Treasury TARP Inspector General Neil Barofsky and Bail Out Nation author Barry Ritholz, on the great issue: how to prevent another financial meltdown. After both had endorsed the Glass- Steagall principle, their Bloomberg host asked them to respond to the widely-cited Bloomberg Editor's View of May 23rd, that returning to the days of the Glass-Steagall Act, "is not likely to work. The financial system has evolved in some irreversible ways." Ritholtz exploded, that the financial system didn't "evolve;" $300 million dollars and 20 years of relentless lobbying by the banks forced the repeal of Glass-Steagall upon society. Barofsky stated that Glass-Steagall is one of a series of dramatic steps that are "essential" to break up the big banks, and end the bailouts. JPMorgan's situation and Bloomberg Market magazine's expose of how Citibank has been engaging in mortgage fraud right into 2012, shows that nothing has changed since the last meltdown.

The next day, CBS News's Moneywatch posted a commentary by Larry Swedroe, Director of Research for the U.S. investment firm, BAM Advisor Alliance, on how to end the threat of the "Too Big to Fail" banks, without putting the taxpayer at risk for bailing them out. Arguing that regulation isn't enough, he proposes setting required capital reserves according to the size of the bank (with a swipe stuck in at that "2,300-page Dodd-Frank bill that no one can even read, let alone implement.") Swedroe then adds: "With that said, restoring the Glass-Steagall Act should be a priority. Again, the price for being able to offer FDIC-insured deposits is that you will be limited in the types of risks you take. If you don't like those limitations, don't take consumer deposits."