WASHINGTON A bipartisan group of lawmakers has reintroduced a bill reviving provisions of the Depression-era law that separated commercial banking from riskier financial activity.
The 21st Century Glass-Steagall Act, which is being sponsored by Sen. Elizabeth Warren, D-Mass., and other lawmakers from both parties, would require banks to divide their depository institutions insured by the Federal Deposit Insurance Corp. from hedge fund, private equity, swaps and other higher-risk businesses.
Warren and her cosponsors are renewing their efforts to pass the bill after having originally proposed it in 2013. The other sponsors are Sens. John McCain, R-Ariz., Maria Cantwell, D-Wash., and Angus King, I-Maine.
The legislation is named after the original Glass-Steagall Act, passed in 1933, which was largely repealed by the 1999 Gramm-Leach-Bliley Act. Under the new bill, banks would have five years to implement the tougher regime, which supporters say would shrink some of the largest banks and remove the government safety net for riskier financial activities.
"Despite the progress we've made since 2008, the biggest banks continue to threaten our economy," Warren said in a press release. "The biggest banks are collectively much larger than they were before the crisis, and they continue to engage in dangerous practices that could once again crash our economy. The 21st Century Glass-Steagall Act will rebuild the wall between commercial and investment banking and make our financial system more stable and secure."
However, while the bill is popular with progressives and other Wall Street critics, it is not expected to advance in Congress this year. Yet it could gain attention on the campaign trail as presidential candidates on both sides of the aisle debate financial reform.