American Banker published another promotion of restoring Glass-Steagall, this one by Matthew Fink, director of Openheimer Mutual Funds and of the Retirement Income Industry Association. Fink's article is on the subject of Sen. Carter Glass and Glass-Steagall, "which President Franklin Roosevelt called `the second most important banking legislation in the history of our country.'... The Glass-Steagal Act and other New Deal measures worked. For decades, the nation avoided lax regulation, excessive speculation, and financial crises," Fink writes.
And he adds, "The Dodd-Frank Act did not impose clear statutory requirements, but instead assigned more than 200 rulemaking projects to regulatory agencies. History demonstrates that reliance on regulators will not work. Unless legislation itself proposes specific rules..."
Fink's support is more significant in that he worked for the Investment Company Institute (the mutual fund industry's trade association) for 24 years and was its president in the 1990s. In 1971, ICI was the principal in the landmark Supreme Court case upholding the force and primacy among banking regulations, of the Glass-Steagall Act. This case was Investment Company Institute vs. Camp.
In 1970 Comptroller of the Currency William B. Camp approved Citibank's plan to offer the public (i.e., its depositors) units in collective investment trusts that the bank organized -- exactly what National City Bank was exposed doing by Ferdinand Pecora in 1933, leading to Glass-Steagall. This was the first in a long string of attempts to flout Glass-Steagall by pro-Wall Street regulators, most infamously Alan Greenspan. In "Camp" the Supreme Court struck that down, ruling for ICI that banks may not offer depositors or the public a mutual fund product. But the Court went far beyond that case, ruling broadly that the Glass-Steagall Act was the primary bank regulation in U.S. national banking law; and that with it, Congress intended to prevent banks from endangering themselves, the banking system, and the public by unsafe and unsound practices and conflicts of interest. And that this intent of Congress included barring them from securities activities with only a few "bank-qualified" exceptions such as U.S. Treasury securities.
From the mid-1980s on, "regulators" were again striving to undo Glass-Steagall in every way they could, on behalf of Wall Street.
For this reason, the Kaptur-Jones Return to Prudent Banking Act repeatedly cites the "Camp" decision and the Supreme Court's strict interpretation as the "minimum" permitted level of commercial bank regulation under a restored Glass-Steagall Act. Even Helicopter Ben Bernanke will have to enforce it until he's thrown out.