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 In 1999, Glass-Steagall was partially repealed by the Gramm-Leach-Bliley Act.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.

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.

A Walk Through the JOBS Act of 2012: Deregulation in the Wake of Financial Crisis

Unexpectedly, in 2011, Congress passed the Jumpstart Our Business Start-ups Act, or JOBS Act of 2012. The legislation rolled back regulations on the financial sector, with the aim of making it easier for small businesses to access capital. New Internet based funding vehicles, such as crowdfunding, helped small businesses overcome hurdles, leaving regulations as the major obstacle. But while the JOBS Act has done some good, it is not perfect. In a new policy analysis, Cato scholar Thaya Brook Knight examines the JOBS Act and if it can serve as a template for future reform.

Cato Studies

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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Banking Unbound: The Cato Summit on Financial Regulation

A well-functioning banking sector is essential to any modern economy. And yet since the 2008 financial crisis, increasing regulation has complicated the relationship between banks and the broader economy. Changes are underway, however, that may open new ways of thinking about banking, bank regulation, and the role the industry may play going forward. Please join us and our distinguished group of speakers as we explore bank regulation, innovation, and the path forward.

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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