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Friday, July 27, 2012

Keating on Glass-Steagall: Look at the Facts

ABA President and CEO Frank Keating yesterday took issue with former Citigroup CEO Sandy Weill’s remarks supporting the breakup of the nation’s largest banks during Wednesday’s CNBC’s “Squawk Box” program. Keating expressed great respect for Weill, but said he was “dismayed” by those comments.
[T]he banking industry strongly believes that no bank -- or company -- should be too big to fail. Moreover, these types of misguided [breakup] proposals aren’t the solution and would damage our still-recovering economy.

Reducing the size of our largest banks would severely diminish their capacity to serve America's largest businesses, driving corporations to foreign competitors that would quickly move to meet their financial needs. Financing would gravitate more heavily to the lightly regulated ‘shadow’ banking system, and our country’s status as the world’s premier financial center would be in grave peril.
He added that it’s time to push the pause button on flawed proposals that would damage the U.S. economy.
Neither our financial system nor local communities are well-served by a rush to judgment on this issue. Those calling for a return to Glass-Steagall to solve the world’s economic problems simply aren’t looking at the facts.
He emphasized that Glass-Steagall would not have prevented the financial crisis, which the GAO found was caused by exotic securities that fueled massive amounts of subprime mortgages. “Policy decisions should be based on reason and facts, not hysteria and catchy sound bites,” Keating said.

1 comment:

Hareesh Reddy said...
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