Re-enactment of the Glass-Steagall Act 1933: Is This a Step in the Right Direction for Global Financial Reform?
Re-enactment of the Glass-Steagall Act 1933: Is This a Step in the Right Direction for Global Financial Reform?
Jacqueline Lopes
In the wake of the 2008 financial crisis, much controversy has ensued over the provision of guarantees and bailouts to institutions considered 'too big to fail'. To address this problem and avert future financial crises, the US agreed to sign into law a Financial Reform Bill by the 4 July 2010, which will: (i) re-enact Glass-Steagall style reforms to ban banks from speculative trading with depositor's money; (ii) introduce a consumer protection bureau to police the sale of credit products; and (iii) empower the government with authority to seize failing systemically important institutions. This paper presents the historical background to the crisis, discusses the implementation of the above reforms and considers the impact at an international level.