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Featured Article filed under Banking | Written by Olivia LaVecchia | No Comments | Updated on Jul 17, 2015

Why Glass-Steagall Should Be a Key Issue During the 2016 Campaign

The content that follows was originally published on the Institute for Local Self-Reliance website at http://ilsr.org/why-glass-steagall-should-be-a-key-issue-during-the-2016-campaign/

On Monday, Hillary Clinton gave the first big economic policy speech of her 2016 campaign. Toward the end of it, an audience member interrupted her, asking, “Senator Clinton, will you restore Glass-Steagall?”

In a campaign season already dominated by candidates’ pursuit of Wall Street donations, how to regulate the banking sector remains one of the most pressing issues facing the country. Seven years after the financial crisis of 2008, the “too big to fail” banks are bigger than ever, while the community banks that make the lion’s share of loans to local entrepreneurs and meet other productive needs are disappearing.

The question that Clinton got on Monday cuts to the center of the debate. In the ongoing push to make our financial system one with less risk, and one that works for more Americans, there’s one policy that we know is effective. It’s the Glass-Steagall Act, a banking reform law passed in 1933, as lawmakers were grappling with the destructive banking activities that caused the Great Depression.

Unlike rules about trading derivatives or risk-weighted capital ratios—rules that, in their complexity, create loopholes for big banks’ fleets of lawyers to exploit—Glass-Steagall, in the course of a mere 37 pages, laid out a series of common-sense reforms. The most central of these was a requirement that investment banks, those that trade securities, be separate from commercial banks, those that accept deposits. In other words, banks swapping subprime mortgage loans couldn’t fund those swaps with a person’s federally-insured life’s savings.
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Photo: Community Bank Borrowers
Featured Article filed under Banking, Independent Business | Written by Stacy Mitchell | No Comments | Updated on May 5, 2015

One in Four Local Banks Has Vanished since 2008. Here’s What’s Causing the Decline and Why We Should Treat It as a National Crisis.

The content that follows was originally published on the Institute for Local Self-Reliance website at http://ilsr.org/vanishing-community-banks-national-crisis/

The precipitous decline in the number of community banks in recent years is a national crisis, and there’s a fierce debate underway right now about what’s to blame. Continue reading

Chart: Bank market share in 2014.
Featured Article, Resource filed under Banking | Written by Olivia LaVecchia | No Comments | Updated on Apr 20, 2015

Just How Concentrated Is Our Banking Sector? [Video]

The content that follows was originally published on the Institute for Local Self-Reliance website at http://ilsr.org/concentrated-banking-sector-video/

This 90-second video shows how giant banks have devoured the banking sector over the past 20 years. Continue reading

Chart: Share of Loans Made to Small Businesses, 2014.
Featured Article, Resource filed under Banking, Independent Business | Written by Olivia LaVecchia | No Comments | Updated on Apr 20, 2015

Small Business Lending by Size of Institution, 2014

The content that follows was originally published on the Institute for Local Self-Reliance website at http://ilsr.org/small-business-lending-by-size-of-institution-2014/

In 2014, community-based financial institutions made 60 percent of all small business loans, even though they control only 24 percent of banking assets. Continue reading

Wall Street photo
Featured Article filed under Banking | Written by Olivia LaVecchia | No Comments | Updated on Aug 20, 2014

Federal Study Confirms “Too Big To Fail” Gives Megabanks a Hidden Funding Advantage

The content that follows was originally published on the Institute for Local Self-Reliance website at http://ilsr.org/federal-study-confirms-too-big-fail-megabanks-hidden-funding-advantage/

When the country’s giant banks were teetering on the verge of collapse during 2008’s financial crisis, the U.S. government stepped in to bail them out. The banks were, in a phrase that has since become infamous, “Too Big To Fail.” Would the government do it again? And does the expectation that it would step in give megabanks an unfair competitive advantage over local community banks? Those are the questions at the heart of an eagerly awaited report released at the end of July by the Government Accountability Office, a nonpartisan federal department. In a conclusion that highlights the need for more regulatory action to reduce concentration in the banking system, the G.A.O. found that the answers to both questions are “yes.” Continue reading