FInancial Crisis Commission Starts Work Next WeekJanuary 8, 2010 - by Donny Shaw
Next week, the Financial Crisis Inquiry Commission, which Congress created last spring to look at 22 specific issues in the financial markets and what impact they had on the crisis, will begin holding public hearings. The lead Republican on the commission, former House Ways and Means Chairman Bill Thomas, wants to look specifically at Glass-Steagall.
Thomas said the commission’s inquiry should include a look at the consequences of the 1999 repeal of the Depression-era Glass-Steagall Act that forced the separation of commercial and investment banks. Without the act, banks were unrestrained, Thomas said.
Two bills have been introduced recently to reinstate Glass-Steagall (House and Senate), and the Politico reported recently that the idea of separating commercial banks from investments banks, thus making them smaller, is catching on in Congress. The impact of repealing Glass-Steagall has been debated constantly over the past year; Wikipedia has a good rundown of the main arguments. The commission’s report, which isn’t due until December, could help nudge the new bills forward in Congress. Whether or not the repeal of Glass-Steagall caused the financial crisis, one thing is certain — the big banks don’t want it reinstated and doing so would be a huge blow to the way they currently do business.