We continue to move from one mini-crisis to the next in the financial markets, so maybe this will all work out OK. One of my major concerns has been that reforms put in place in the 1930s to ensure the stability of the banking system have steadily eroded. The repeal of Glass-Steagal allowed traditional depository banks (which have direct access to Federal funds) to engage in much more risky financial wizardry. The recent collapse of mortgage lending standards and the resulting housing debacle is a good example of what happens when mega-banks operate without adult supervision.
Anyway, I was involved in helping to draft this on-line petition. I tried to get the author to tone down the rhetoric and eliminate the last two points. The petition is here. http://financialpetition.org/ .
If you take a look at it, please vote in the poll and let me know what you think.
More information about Glass-Steagal is here: http://en.wikipedia.org/wiki/Glass-Steagall_Act.
Monday, October 15, 2007
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