Finance, Banking & Monetary Policy

The Repeal of the Glass-Steagall Act: Myth and Reality

The Glass-Steagall Act was enacted in 1933 in response to banking crises in the 1920s and early 1930s. It imposed the separation of commercial and investment banking. In 1999, Glass-Steagall was partially repealed by the Gramm-Leach-Bliley Act. When the United States suffered a severe financial crisis less than a decade later, some leapt to the conclusion that this repeal was at least partly to blame. Indeed, both the Republicans and the Democrats included the reinstatement of Glass-Steagall in their 2016 election platforms. In a new study, international financial regulatory expert Oonagh McDonald argues that the notion that repealing Glass-Steagall caused the financial crisis, and that bringing it back would prevent future crises, is not supported by the facts.

Reforming the National Flood Insurance Program: Toward Private Flood Insurance

Authorization for the National Flood Insurance Program (NFIP) expires on September 30, 2017, offering policymakers an opportunity to rethink the scheme and bring forward reforms that would allow a private flood insurance market to develop in its place. In a new paper, Cato’s Ike Brannon and Ari Blask delve into the NFIP’s history, structure, and current problems, as well as the failures of recent reform efforts. The authors conclude in their analysis that, by all salient criteria, a private market is superior to a government-run flood insurance program.

New York’s Bank: The National Monetary Commission and the Founding of the Fed

Legislation calling for the establishment of a Centennial Monetary Commission “to examine the United States monetary policy, evaluate alternative monetary regimes, and recommend a course for monetary policy going forward,” was introduced in both the House and the Senate in 2015. Prompted by the subprime financial crisis, and particularly by a belief that the crisis revealed significant shortcomings of the Federal Reserve System, the Centennial Monetary Commission plan draws inspiration from the National Monetary Commission convened over a century ago. In a new paper, Cato scholar George Selgin reviews the earlier Monetary Commission’s origins, organization, and shortcomings, in order to suggest how a new commission might improve upon it.

Cato Studies

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Of Special Note

The Repeal of the Glass-Steagall Act: Myth and Reality

The Repeal of the Glass-Steagall Act: Myth and Reality

The Glass-Steagall Act was enacted in 1933 in response to banking crises in the 1920s and early 1930s. It imposed the separation of commercial and investment banking. In 1999, Glass-Steagall was partially repealed by the Gramm-Leach-Bliley Act. When the United States suffered a severe financial crisis less than a decade later, some leapt to the conclusion that this repeal was at least partly to blame. In a new study, international financial regulatory expert Oonagh McDonald argues that the notion that repealing Glass-Steagall caused the financial crisis, and that bringing it back would prevent future crises, is not supported by the facts.

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Multimedia

John Allison Media Highlights

Best moments from John Allison’s discussion of the Fed and financial regulation during his December 2016 media appearances.

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Educational Programs

EconTalk LIVE: David Beckworth on Monetary Policy and the Great Recession

The Cato Institute’s Center for Monetary and Financial Alternatives is pleased to announce another installment of its “live” edition of EconTalk. Join Russ Roberts as he interviews David Beckworth on the part that the Federal Reserve and other central banks played (and the part they ought to have played) in the Great Recession.

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Financial Crisis and Reform: Have We Done Enough to Fix the Government-Sponsored Entities?

While there is an ongoing debate about what caused the 2008 financial crisis, there is little disagreement that the housing market was at the heart of the problem. In the years since the crisis, Congress passed a massive new piece of legislation, the Dodd-Frank Act, and federal financial regulators have been actively issuing new regulations. But what about the government-sponsored housing entities, known as Fannie Mae and Freddie Mac? What was their role in the crisis, and what has been done to reduce their potential harm in the future? Join us as we discuss these questions with experts from the policy world and the industry itself.

Testimony

Sound Monetary Policy

Highlights from Center for Monetary and Financial Alternatives Executive Advisory Council Chair John A. Allison’s testimony before the U.S. House Committee on Financial Services.

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