Break-up-the-big-banks fever hits the states

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Break-up-the-big-banks fever hits the states


Piggybankblog posted on 08/15/13

Cross linked with


Elizabeth Warren’s effort to break up Wall Street banks through a return to Depression-era laws may not have a lot of support in Congress, but it has a sympathetic audience in state capitals across the country.

Lawmakers in at least 18 states have introduced resolutions this year calling on Congress to split up banking giants by putting back in place a wall between commercial banking, taking deposits and making loans, and investment banking, the world of traders and deal-makers.

Five years after the 2008 financial crisis and three years after enactment of the 2010 Dodd-Frank law, these symbolic resolutions show there is still a significant amount of public anger toward big banks.

And if these proposals gain enough traction in state legislatures, a growing number of members of Congress could feel pressure to get behind this effort to reinstate the 1933 Glass-Steagall Act — a cause Warren championed as a candidate and has reinvigorated as a freshman Massachusetts senator.

(QUIZ: Do you know Elizabeth Warren?)

“We on the state level have been looking for an Elizabeth Warren — someone to carry this banner for us,” said Illinois state Rep. Mary Flowers, a Democrat who is the lead sponsor on a resolution introduced in May that urges Congress to reinstate Glass-Steagall, which was repealed in 1999.

Maryland Democratic state Del. Aisha Braveboy, who co-sponsored a resolution in her state, said: “She is the inspiration.”

So far, only Maine and South Dakota have approved a Glass-Steagall resolution. The states where lawmakers are pressing the issue include Mississippi, Pennsylvania, Alabama and California.

This week, the National Conference of State Legislatures will vote on a Glass-Steagall resolution introduced by Delaware Republican state Sen. Catherine Cloutier at its legislative summit in Atlanta.

(Also on POLITICO: Morning Money)

Large banks aren’t taking the issue lightly.

Take Delaware — corporate home to the credit card operations of several banks.

When a group of bipartisan state senators introduced a resolution in June calling for a return to Glass-Steagall, four lobbyists — including those working on behalf of JPMorgan Chase and Bank of America — showed up at a hearing to denounce the idea. The resolution was shelved.

“I can’t say I was really surprised by the pushback,” said state Sen. Bruce Ennis, a Democrat who is one of the resolution’s co-sponsors. “They don’t want to rock the boat.”

Delaware state Sen. Robert Venables, a Democrat and another co-sponsor, added: “I’m 80 years old and I remember the aftermath of the Great Depression — this was why it was put in. And then the Clinton administration repealed it.”

Not all state lawmakers pushing for a breakup of big banks cite Warren, a liberal who came to prominence because of her calls to get tough on Wall Street, as an inspiration. Several are conservatives with a tea partier’s dislike of Wall Street and the taxpayer bailouts that resulted from the financial crisis.

In South Dakota, state Rep. Stace Nelson — a self-described tea partier with a “mean libertarian” streak — and other state lawmakers urged Senate Banking Committee Chairman Tim Johnson (D-S.D.) last month to support Glass-Steagall after the state Legislature adopted the measure earlier this year.

“People are gravely concerned about what has happened on Wall Street with the bailouts and the government getting involved,” said Nelson, who has formed a 2014 Senate exploratory committee.

My name is John Wright! AND I AM FIGHTING BACK!

All Rise! The Honorable Judge Wright has left The Court of Public Opinion!


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