While Hillary Clinton has demurred on reinstating provisions in the Depression-era Glass-Steagall Act separating commercial and investment banking, Sen. Elizabeth Warren continues to defend the idea. Tuesday, she characterized Glass-Steagall as a means of helping middle-class and low-income people.
At the Democratic presidential debate last month, when Clinton was asked about reinstating Glass-Steagall, the former secretary of State said, “My plan is more comprehensive.” She said that while concerns about banks being too big to fail were valid, focus was needed on “other players” outside of the big banks—such as AIG, which was an insurance company, and Lehman Brothers, which was an investment bank.
“I want to make sure we cover everybody—not what caused the problem last time but what could cause it the next time,” Clinton said.
But at event at the Dirksen Senate Office Building highlighting University of Georgia School of Law professor Mehrsa Baradaran’s book How the Other Half Banks, Warren defended the notion of reinstating Glass-Steagall. She said the question of whether Glass-Steagall “might not all by itself have been able to stop the financial crisis” was the wrong one to ask.
“The way I see it, the basic question we should be asking about Glass-Steagall is, Why should investment banks have access to your FDIC-insured checking accounts and savings accounts?” Warren said. “Why is that helpful to the American economy? Why is that helpful to America’s middle class?”