Legislation to restrict banks from engaging in riskier trading and investment activity was introduced Thursday in the Senate by Sens. Elizabeth Warren, D-Mass.; John McCain R-Ariz.; Maria Cantwell, D-Wash.; and Angus King, I-Maine.
The purpose of the 21st Century Glass-Steagall Act is to update the Banking Act of 1933, known as Glass-Steagall, which the sponsors note has support from the White House and National Economic Council Director Gary Cohn. The legislation is aimed at making “too big to fail” institutions smaller and safer, and reducing the chance of a government bailout of those institutions.
The new version “will re-establish the wall between commercial and investment banking and make our financial system more stable and secure. Reinstating Glass-Steagall has broad bipartisan support, and it's time to get it done,” Ms. Warren said in a statement.
The bill was referred to the Senate Committee on Banking, Housing, and Urban Affairs.
Mr. McCain said that since core provisions of Glass-Steagall were repealed in 1999, “a culture of excessive risk-taking has taken root in the banking world, placing the financial security of millions of hardworking American taxpayers at risk,” despite extensive regulations imposed by the Dodd–Frank Wall Street Reform and Consumer Protection Act after the 2008 financial crisis.