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Tuesday, July 19, 2016

Nichols: Glass-Steagall Would Not Have Prevented Financial Crisis

As the Republican national convention commenced in Cleveland, ABA President and CEO Rob Nichols responded to news that the GOP’s platform includes a call to bring back Glass-Steagall, a Depression-era law that separated depository and investment banking. Glass-Steagall was repealed in 1999, and critics of the financial industry have often pointed to the law’s removal as an underlying cause of the financial crisis, an assertion which Nichols refuted.
Nichols said:
Unlike in many parts of the world, America’s banking industry is well poised to fuel strong economic growth and job creation. Policymakers should encourage that instead of calling for a return to Depression-era regulation that would restrain banks’ ability to drive our economy forward. All of our bank regulatory agencies have agreed that Glass-Steagall would not have prevented the crisis or the housing market collapse. America’s economy depends on banks of all sizes to meet the needs of a large and diverse group of clients, customers and communities.

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