Another Strong Voice for Glass-Steagall
August 12, 2012 • 10:14PM

Chris Farrell, the economics editor of, delivered a strong endorsement of Glass-Steagall in a column Saturday. Asking himself whether our financial system is any safer than at the time of the Lehman Brothers collapse in Sept. 2008, he cited the recent JPMorgan losses and the Libor rigging scandal, concluding, "Big financial institutions are bigger than ever—and every bit as reckless and dangerous as before. We need to rein in these 'too big to fail' behemoths before they take down the economy again. Step one is to put the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 out of its misery. The act is more than 2,300 pages—and it's complicated, weak, compromised, riddled with loopholes. Step two is to immediately replace the bill with the Glass-Steagall Act. It was written in 1933 and it's just 37 pages long. It separated banks that accepted deposits backed by the FDIC from investment banks. It blocked Wall Street traders from speculating in the capital market casino with government-insured money. Glass- Steagall worked for some 60 years until it was repealed in 1999. It's simple, it's pro-competition and pro-capitalism. Best of all, if it was restored, it would slash the odds of another taxpayer-funded bail out." After making this blunt and laudatory comment, Farrell naively proposed that "tough-minded" Paul Volcker be put in charge of implementing the reinstatement of Glass-Steagall.