The Right Wants Glass-Steagall for the Wrong Reasons

By Mike Konczal

It’s impossible to look at any single financial regulation without understanding the problem it is trying to solve and how it would hang together with the rest of the financial regulatory regime. This is why cost-benefit analysis of financial rules isn’t very useful, as any rule depends on all the other rules. It also means that two people who agree on one idea for regulation could still bring about two very different worlds, one significantly worse than the other.

This has happened with Glass-Steagall, the Depression-era separation of commercial and investment banking. Both the Republicans and Democrats endorsed its return in their party platforms. But there are two ways to talk about the reform, a Left and a Right way to imagine what problem Glass-Steagall would solve and what kind of financial regulatory regime you would have after it was reinstated. I think the Right’s way is wrong, dangerously so, and would leave us with a split regulatory regime and a world very similar to 2007.