Glass-Steagall

It's important to segregate the activities of commercials banks from those of investment banks (no such thing as speculative banks actually)

The Glass Stegal Act was put in place after The Great Depression, to segregate the workings of commercial banks from that of investment banks.

It was repealed in the late 90s. In less than 2 decades of this abolition, the world witnessed a financial crisis which brewed partly because of excess exposures taken by investment banks, though credit rating agencies, regulators, and, sub prime borrowers and lenders are also at fault.

It is prudent that an entity which accepts deposits from the general public not be allowed to invest the money without some prudential guidelines. The Central bank needs to provide such guidelines which will restrict the proportion of money which can be invested in a sector, industry and company respectively. This is done to contain exposure to specific risks and thereby diversify the risk.

As of yet there is not a sufficiently strong regulatory environment for us to have both commercial and investment operations in one entity.
Maybe in the coming years when we have better disclosure norms and prudential guidelines, we could move toward the dual role system.

 

Most large corporations have become de facto slave systems. There is not better representation of that than the banking system and debt manipulation. We're moving toward feudalism unless something changes.

The repeal of Glass-Steagall was when the power of money eclipsed the power of government.

 

Support Bernie sanders guys!