written by Tom Beisner
As a consultant to community banks, I was excited when Glass-Steagall was repealed in 1999. I saw it as an opportunity for community banks to offer additional services to their current customers and to find additional revenue sources to build value for their owners. What I didn’t see was how the large banks would be able to leverage FDIC insured deposits to make risky investments in CDO’s and CMO’s that would ultimately lead to the financial meltdown nine years later.
I agree with Senator John McCain that the reinstatement of a Glass-Steagall type firewall would go a long way to help insure that community banks and taxpayers would not have to foot the bill for another meltdown caused by large banks.
Senator McCain has proposed an amendment for a Glass-Steagall type firewall that would separate commercial banks from investment banks. See the CNBC interview below.