During an appearance on CNBC this week, Sen. Elizabeth Warren shot down TV anchor Brian Sullivan after he said that no law could prevent major bank busts.
“No, that is just wrong,” Warren aggressively replied.
Warren proved her point by enlightening Sullivan on historical facts surrounding the Glass-Steagall Act. She noted that until 1933, before the act, the United States suffered a series of booms and busts about every fifteen years. After the act, the United States enjoyed a 50-year period of economic stability — that is, Warren argued, until parts of the act began to be chipped away.
“We kept the system steady and secure,” Warren said. “You are not going to defend the proposition that regulation can never work, it did work.”
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While Warren agreed that Glass-Steagall alone could not prevent a crash, it certainly reduced the risk of one.
Warren’s appearance was one in a series for her media tour, in an effort to bring attention to a bipartisan refurbishing of the Glass-Steagall Act, known as the 21st Century Glass-Steagull Act. Warren, Sen. John McCain, R-Ariz., and Sen. Angus King, I-Maine, have sponsored the act, which would separate traditional banking from speculative investment.
Under the act, banks that take federally insured deposits would be barred from trading in derivatives, dealing swaps, operating hedge funds and private investment entities.