Cantwell Raises Possibility of Glass-Steagall Type Amendment
Speaking today at a news conference on derivatives, Sen. Maria Cantwell (D-Wash.) raised the possibility of proposing an amendment to Sen. Blanche Lincoln’s
Jul 31, 2020438.7K Shares6.8M Views
Speaking today at a news conference on derivatives, Sen. Maria Cantwell (D-Wash.) raised the possibility of proposing an amendment to Sen. Blanche Lincoln’s (D-Ark.) derivatives reform proposal that might force banks to separate their commercial and investment banking functions.
“I’m a purist,” Cantwell said, in response to a question regarding whether she supported the Volcker Rule (a proposal by former Federal Reserve Chairman Paul Volcker to ban “proprietary trading,” effectively banning any bank with federal backing from speculating with its own money). “If you want to take fuel out of the fire, I would also personally say that you should break up the big banks and not have investing and commercial banking in the same bucket. I will offer that amendment on the floor.”
The portions on derivatives trading offer a more specific iteration of that same idea. Section 106 of Lincoln’s derivatives reform proposalbans banks from receiving “federal assistance (including federal deposit insurance, and access to the Federal Reserve discount window)” if they contain desks that trade swaps, one currently unregulated type of derivative.
Cantwell, who did not clarify when asked a follow-up, seemed to indicate that her amendment hopes to go further — preventing banks from forgoing federal backing if they deal not only in swaps, but in any sort of speculative trading. This winter, Cantwell and Sen. John McCain (R-Ariz.) were due to proposea return to the Glass-Steagall rules, rescinded in 1999, that preventedcombined commercial and investment banks. But that provision has not made it into the final bill.
Paolo Reyna
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Paolo Reyna is a writer and storyteller with a wide range of interests. He graduated from New York University with a Bachelor of Arts in Journalism and Media Studies.
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