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Daily Archives: January 26, 2016

The Glass – Steagall Act: A Legal and Policy Analysis

CRS – The Glass-Steagall Act: A Legal and Policy Analysis – David H. Carpenter, Legislative Attorney; Edward V. Murphy, Specialist in Financial Economics; M. Maureen Murphy, Legislative Attorney. January 19, 2016.

“The phrase “Glass-Steagall” generally refers to the separation of commercial banking from investment banking. Congress effected a separation of commercial and investment banking through four sections of the BankingActof1933—Sections16, 20,21, and 32. These four statutory provisions are commonly referred to as the Glass-Steagall Act.

Key Takeaways of This Report:

  • The Glass-Steagall debate is not centered on prohibiting risky financial services; rather, the debate is about whether to permit inherently risky commercial and investment banking activities to be conducted within a single firm—specifically within firms holding federally insured deposits.
  • Over the course of the nearly 70-long Glass-Steagall era, the clear cut separation of traditional commercial banking and securities activities gradually eroded. This erosion was the result of a confluence of matters, including market exchanges, statutory changes, and regulatory and judicial interpretations.
  • The Glass-Steagall era formally ended in 1999 when the Gramm-Leach-Bliley Act (GLBA) repealed the Glass Steagall Act’s restrictions on affiliations between commercial and investment banks.
  • Less than a decade after GLBA, the United States suffered its worst financial crisis since the Great Depression. Some have argued that the partial repeal either was a cause of the financial crisis that resulted in the so-called Great Recession or that it fueled and worsened the crisis’s deleterious effect. On the other hand, some policymakers argue that Glass-Steagall issues were not significant causes of the crisis, and that the Glass-Steagall Act would have made responding to the crisis more difficult if it had remained in place.
  • The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act; P.L. 111-203) was Congress’ primary legislative prescription to prevent a similar financial crisis in the future.
  • The Dodd Frank Act neither reinstated the sections of the Glass Steagall Act that were repealed by GLBA nor substantially modified the ability of banking firms to affiliate with securities firms. It did, however, include some arguably Glass Steagall like provisions, which were designed to promote financial stability going forward, reduce various speculative activities of commercial banks, and reduce the likelihood that the U.S. government would have to provide taxpayer support to avert or minimize a future financial crisis.
  • Some believe that a more effective way of accomplishing these policy objectives would be to fully reinstate the Glass Steagall Act. In fact, multiple bills have been introduced in the 114th Congress with that stated purpose. These bills include S. 1709 H.R. 3054 , The 21st Century Glass Steagall Act of 2015 and H.R. 381, the Return to Prudent Banking Act of 2015. On the other side of the policy discussion, some argue that the Glass Steagall Act is ill suited for the current financial system and that the recent financial crisis would have occurred even if GLBA had never partially repealed the Glass Steagall Act.
  • Even if the Dodd Frank Act had completely reenacted the repealed provisions of the Glass Steagall Act, the financial history of the Glass Steagall era shows that regulatory walls could be difficult to maintain or enforce.”

Best Practices for Reducing Near-Road Pollution Exposure at Schools

EPA – Best Practices for Reducing Near-Road Air Pollution Exposure at Schools “Motor vehicles are a major source of air pollution in the United States. Research suggests that particulate matter (PM) from vehicles, notably heavy-duty diesel vehicles, may be especially harmful. While vehicle emissions have decreased over the past several decades due to EPA’s emissions… Continue Reading

NOAA, CIRES study: Wind, sun could eclipse fossil fuels for electric power by 2030

NOAA – “The United States could slash greenhouse gas emissions from power production by up to 78 percent below 1990 levels within 15 years while meeting increased demand, according to a new study by NOAA and University of Colorado Boulder researchers. The study used a sophisticated mathematical model to evaluate future cost, demand, generation and… Continue Reading

Regulatory Relief for Banking: Selected Legislation in 114th Congress

Via FAS, CRS report – Regulatory Relief for Banking: Selected Legislation in 114th Congress, January 19, 2016. “The 114th Congress is considering legislation to provide “regulatory relief” for banks. The need for this relief, some argue, results from new regulations introduced in response to vulnerabilities that were identified during the financial crisis that began in… Continue Reading

ODNI Strategic Human Capital Plan 2012-2017

Via FAS, this Office of the Director of National Intelligence (ODNI) Human Capital Plan was obtained under FOIA by Prof. Van Puyvelde. FAS – “As of 2012, the total Intelligence Community workforce was 76.6% white, and 61.6% male, both higher than the overall federal workforce (which was 65.6% white and 55.9% male).” Also via FAS… Continue Reading

ABA Journal – Will those who led the financial system into crisis ever face charges?

Terry Carter’s long read also appears in the February 1, 2016 issue of the ABA Journal – “…Last September, the department in effect admitted that it had been wrong all along when it announced a new policy prioritizing prosecution of individuals in corporations who might have engaged in criminal acts, and requiring the companies to… Continue Reading

Yahoo Releases Largest-ever Machine Learning Dataset for Researchers

Suju Rajan – “Data is the lifeblood of research in machine learning. However, access to truly large-scale datasets is a privilege that has been traditionally reserved for machine learning researchers and data scientists working at large companies – and out of reach for most academic researchers. Research scientists at Yahoo Labs have long enjoyed working… Continue Reading