[Congressional Record Volume 157, Number 162 (Wednesday, October 26, 2011)]
[House]
[Page H7076]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              {time}  1040
  GLASS-STEAGALL AND THE ANNIVERSARY OF THE STOCK MARKET CRASH OF 1929

  The SPEAKER pro tempore. The Chair recognizes the gentlewoman from 
Ohio (Ms. Kaptur) for 5 minutes.
  Ms. KAPTUR. Mr. Speaker, this week marks the 82nd anniversary of 
Black Thursday, the start of the great stock market crash of 1929. On 
that day, rampant Wall Street speculation that had characterized the 
Roaring Twenties came to an abrupt end. Our country learned many 
valuable lessons about the banking system and took action to contain 
the severe risks of an unregulated banking system. This body passed the 
Banking Act of 1933, commonly called Glass-Steagall, named after the 
lead sponsors of the bill. Well, from the shape of our economy today, 
it appears the U.S. forgot important lessons of economic behavior.
  The banking system we have today again is too risky, too 
concentrated, and with too much absentee ownership. As a result, our 
system of credit is seized up and also less competitive. This results 
in lower capital formation in our local communities, which translates 
into fewer jobs.
  Our system also has become one that does not financially empower or 
reward the average depositor. Consumers know that their interests on 
certificates of deposit have fallen to all-time lows; yet we see 
banking fees increasing on all kinds of transactions. Yes, it almost 
seems like you have to pay the banks to take your money. Money center 
banks, meanwhile, are earning huge profits while tightly restricting 
loans and hindering our economic recovery.
  The U.S. has far fewer banks and savings and loan institutions today 
than we did a decade and a half ago. In fact, the Federal Deposit 
Insurance Corporation's figures show our vast Nation has only 6,414 
commercial banks today, half the number that existed in 1990. In 
addition, 856 banks are on the FDIC's watch list, a very high figure. 
Moreover, 60 percent of the savings institutions have disappeared over 
the same period of time.
  We see enormous accumulation of banking assets and vast financial 
power moved to a handful of powerful institutions that are making 
enormous profits, indeed, the highest profits in our Nation in addition 
to the oil companies. Fifteen years ago, the assets of the six largest 
banks were approximately 17 percent of gross domestic product. Today, 
after the recent financial panic, estimates for assets of those same 
banks are over half of our gross domestic product. So six financial 
institutions control an enormous percentage, not just of our banking 
system but, indeed, our economy and, in turn, our Nation's future. This 
is too much power in too few hands. The American people are feeling it 
in the restriction of credit, the lack of jobs with sluggish growth, 
and the lack of competitive capital opportunities.
  Over a decade ago, Congress' ultimate response to the stock market 
crash of 1929 was abolished. Yes, the law that had separated risky Wall 
Street speculations from prudent community banking--the Glass-Steagall 
Act--was obliterated by the conference committee on the Gramm-Leach-
Bliley Act. That legislation became law and created an economic time 
bomb that started ticking and contributed in a major way to the 
economic explosion in September 2008.
  Financial abandon replaced prudence. Wall Street and its supporters 
in Congress became obsessed with stripping away all the prudent banking 
rules that were once the cornerstone of what had been a stable 
financial system. That system formed capital, protected consumer 
accounts, paid them a decent return on their money, and created the 
greatest period of growth in American history. That system built 
confidence, dependability, and wealth across our economy.
  Wall Street lobbyists were eager to walk back the hands of time, 
falsely claiming the Banking Act of 1933--that had formed the basis of 
stable credit for half a century--was quaint and outdated. But when 
Graham-Leach-Bliley was signed into law, the protections that had 
separated prudent banking from risks were swept into the dust bin and 
financial calamity followed.
  The Glass-Steagall protections are not outdated. Wall Street opposed 
them in the 1930s just as much as they do today. In the 1930s, it was 
the Pecora Commission--and we need another one--that was an instrument 
of this Congress that was charged with investigating Wall Street abuses 
in the banking system following the Great Depression. Their work is 
often credited with creating the momentum for passage of the Glass-
Steagall Banking Act of 1933. And Pecora himself wrote that ``bitterly 
hostile was Wall Street to the enactment of the regulatory 
legislation.''
  What is different today is how tamely Congress and the executive 
branch reacted to Wall Street abuse. Following the 2008 economic 
collapse, there was not an immediate recognition that what was needed 
was restoration of that sound financial framework.
  Mr. Speaker, I have a bill, H.R. 1489, the Return to Prudent Banking 
Act. I ask my colleagues to cosponsor this bipartisan legislation. 
America surely needs to restore a secure, dependable, and prudent 
banking system so we can get on with the job of job creation.

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