Thursday, November 12, 2015

Glass-Steagall takes center stage in 2016

A Depression-Era banking law is helping to shape the 2016 presidential field, as Wall Street critics push hard for its return.

The Glass-Steagall Act, the 1933 law that established a firewall between investment and commercial banking, was repealed 16 years ago on Thursday.

Where candidates stand on its possible return has become a litmus test in both parties, with supporters arguing Congress needs to restore it to prevent the next financial collapse.

The debate is leaving the 2016 field, and particularly Hillary Clinton, in a tough spot.

“A lot of people view it as a litmus test,” said Dennis Kelleher, president and CEO of the Wall Street reform group Better Markets.

For those who are in favor of restoring the law, a candidate’s backing Glass-Steagall says “‘I get it, I get it. I will be tough on Wall Street. Trust me,’” Kelleher said.

Calls from the left and right for a return to Glass-Steagall have popped up all over the campaign trail, particularly from feisty populist underdogs.

The calls are more popular on the Democratic side, where both Sen. Bernie Sanders (I-Vt.) and former Maryland Gov. Martin O’Malley have echoed Sen. Elizabeth Warren (D-Mass.) in supporting restoration of the law.

In the Republican field, former Arkansas Gov. Mike Huckabee is the only active candidate who backs putting Glass-Steagall back in place, though former Texas Gov. Rick Perry proposed a new banking firewall as part of his Wall Street overhaul before he dropped out of the race.

Democratic frontrunner Hillary Clinton and many of her potential GOP rivals are trying to find space in the center to tap into public unrest over Wall Street without turning off Wall Street’s deep fundraising wells.

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