Too Big To Fail: The Volcker Rule or Glass Steagall?

It will be tough to remedy “too big to fail” with the Volcker Rule. At the other extreme, some suggest a 2013 version of Glass-Steagall. Here is the short version of the facts: Proposed by former Fed Chair Paul Volcker,…

An Ice Cream Bank?

Should you deposit your money at your local ice cream parlor? Yes, according to a Pennsylvania businessman who has opened a bank in his ice cream shop. But he says his business idea is not really a bank. He does…

Too Big To Fail

Imagine for a moment that you are the CEO of a large bank. Offered the opportunity to participate in a risky business deal, you say, “Yes.” If the venture succeeds, you benefit. If it fails and threatens your bank’s survival,…

The Top 19

Are 19 banks “too big to fail?” Listening to Bloomberg radio, I heard that four banking firms control close to 50 percent of their industry’s assets, that the top 19 control 85 percent, and that the bottom 8000 control 15 per cent.  An…

Deja Vu Glass-Steagall?

Thinking back to Glass Steagall (and related 1930s legislation) which was formally repealed in 1999 (summarized in “It’s Complicated”, my 1/17 blog), there were five problem areas that sound remarkably similar to today’s challenges: 1. Abuse of diversified investment services.…

It’s Complicated

Oversimplification concerns me. Some people are saying we should resuscitate Glass-Steagall. Passed in 1933, the Glass-Steagall Act (Banking Act of 1933) prohibited commercial banks from engaging in investment banking activities and created the FDIC. Also a part of 1933 legislation,…