To: The United States Senate

Rein in the Still-Too-Big-To-Fail, Too-Big-To-Manage Big Banks

I support and urge you to support the bi-partisan “21st Century Glass-Steagall Act” S. 1709. We don’t need a repeat of the 2008 financial collapse brought on by Wall Street excess. That five mega-banks each failed “living will” tests required by the FDIC and Federal Reserve should be a warning sign that the big banks are still too big to fail and too big to manage.

The “21st Century Glass-Steagall Act” will reinstate key protections for depositors and simplify their operations. We need insurance that investment banks can take risks but consumer deposits in commercial banks will be protected.

Why is this important?

Coming out of the Dodd-Frank 2010 overhaul, the goal was to make large banks less of a threat to the economy. One of the requirements was that the largest financial institutions need to submit plans, or living wills, for how the banks would enter bankruptcy in an orderly fashion in case of a crisis. Plans submitted by five of the largest banks have failed testing, which suggests that if there were another crisis today, the government would need to prop up the largest banks if it wanted to avoid financial chaos.

In order to prevent that from happening, we need to restore The Glass-Steagall Act, which successfully protected taxpayers and the economy from the risky bets investment banks take. From 1932 to 1999, the original Glass-Steagall Act led to the largest sustained period of economic growth and safe banking in U.S. history; it ensured that investment banks could take risks but consumer deposits in commercial banks were protected.

Just seven years after it was largely repealed in 1999, the economy suffered a major collapse and taxpayers were forced to bail out the banks. Now that five big banks have flunked two separate regulator tests of their ability to avoid being bailed out again, it’s time to pass the “21st Century Glass-Steagall Act” to rein in the still too-big-to-fail and still too-big-to-manage big banks.