[Congressional Record Volume 161, Number 104 (Tuesday, July 7, 2015)]
[Senate]
[Page S4689]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. WARREN (for herself, Mr. McCain, Mr. King, and Ms. 
        Cantwell):
  S. 1709. A bill to reduce risks to the financial system by limiting 
banks' ability to engage in certain risky activities and limiting 
conflicts of interest, to reinstate certain Glass-Steagall Act 
protections that were repealed by the Gramm-Leach-Bliley Act, and for 
other purposes; to the Committee on Banking, Housing, and Urban 
Affairs.
  Ms. WARREN. Mr. President, I rise today to speak in support of the 
21st Century Glass-Steagall Act. I am honored to join Senators McCain, 
Cantwell, and King in introducing this bill.
  Washington is a partisan place and this Congress has its share of 
partisan bills, but we have all joined together because we all want a 
more stable economy that works not just for those at the top but for 
everyone.
  Seven years ago, Wall Street's high-risk bets brought our economy to 
its knees. The Dallas Fed estimates that the total cost of the crash 
was $14 trillion. Millions of families lost their homes. Millions of 
people lost their savings. Millions of people lost their jobs. And even 
today, millions of hard-working, play-by-the-rules people are still 
struggling to survive.
  Over the past 7 years, we have made some real progress dialing back 
the risk of a future crisis. But despite that progress, the biggest 
banks continue to threaten the economy. The biggest banks are 
collectively much bigger today than they were 7 years ago. They 
continue to engage in dangerous, high-risk practices. And with each new 
headline and subsequent legal settlement, it becomes clearer that they 
keep chasing profits even if it means breaking the law.
  The big banks weren't always allowed to take on big risks while 
enjoying the benefits of taxpayer guarantees. Four years after the 1929 
Wall Street crash, Congress passed the Glass-Steagall Act, which is 
best known for separating investment banks and their risk-taking from 
commercial banks that manage savings accounts, checking accounts, and 
offer other banking services.
  For 50 years, Glass-Steagall played a central role in keeping our 
country safe. Traditional banking stayed separate from high-risk Wall 
Street banking. There wasn't a single major financial crisis, and the 
financial sector helped contribute to a sustained, broad-based economic 
growth that helped build America's middle class. But the big 
traditional banks wanted the higher profits they could get from taking 
more risks, and investors in the big investment banks wanted access to 
the low-cost, insured deposits of traditional banks, so they teamed up 
to try to tear down Glass-Steagall's wall. Starting in the 1980s, 
regulators of the Federal Reserve and the Office of the Comptroller of 
the Currency buckled under industry pressure and began poking bigger 
and bigger holes in the wall between investment and commercial banking, 
and, after 12 separate attempts, Congress repealed most of Glass-
Steagall in 1999.
  The 21st Century Glass-Steagall Act will rebuild the wall between 
commercial banks and investment banks, separating traditional banks 
that offer savings and checking accounts and that are insured by the 
FDIC from their riskier counterparts on Wall Street. Banks can choose: 
Take big risks using investors' money or be very careful using 
depositors' money--but no more mixing the two.
  The 21st Century Glass-Steagall Act also fills in the holes the 
regulators punched in the original Glass-Steagall, and it recognizes 
that the financial markets have become more complicated since the 
1930s, so it covers products that did not exist when Glass-Steagall was 
originally passed.
  By itself, the 21st Century Glass-Steagall Act will not end too big 
to fail and implicit government subsidies, but it will make financial 
institutions smaller, safer, and move us in the right direction. By 
separating depository institutions from riskier activities, large 
financial institutions will shrink in size and won't be able to rely on 
FDIC insurance as a safety net for their high-risk activities. It will 
stop the game these banks have played for far too long--heads, the big 
banks win and take all the profits; tails, the taxpayers lose and get 
stuck with the bill.
  Our proposal has an added benefit--it is simple. It doesn't require 
thousands of pages of new rules. And better still, if we rebuilt the 
wall between commercial banks and investment banks, we could even cut 
back on some of the other rules we have in place to stop big banks from 
taking on too much risk.
  If financial institutions actually have to face the consequences of 
their business decisions, if they cannot rely on government insurance 
to subsidize their riskiest activities, then the investors in those 
institutions will have a stronger incentive to closely monitor those 
risks before they get out of hand and take down the entire economy. 
Government regulators could play a more limited role, and that is an 
outcome everyone should like.
  It has now been 7 years since the great financial crash. Most of the 
banks that were too big to fail in 2008 are even bigger now. Shortly 
after they were bailed out by the American taxpayers, these banks once 
again started raking in billions of dollars in profits. In fact, in 
2014 they posted two of their most profitable quarters in the last 20 
years. Between 2010 and 2013, the median compensation for a big-bank 
CEO was about $15 million a year while median household income in the 
United States during that same period--that is, income for the whole 
family--was barely above $50,000. The big banks and their executives 
have recovered handsomely from the crisis they helped create while too 
many other Americans are still scraping to get by.
  We weren't sent to Washington to work for the big banks. It is time 
for a banking system that serves the best interests of the American 
people, not just those few at the top. The 21st Century Glass-Steagall 
Act is an important step in the right direction, and I ask my 
colleagues to join me in supporting this bipartisan measure to 
strengthen our economy.

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