Two For The Price Of One

http://takingnote.blogs.nytimes.com/2012/07/27/opinion-report-glass-steagall/

If you are a regular reader of this blog you will know that a quasi-regular title to posts is WHAT IS WRONG WITH THIS PICTURE?!? and today I am announcing the start of a new quasi-regular post SOMETHINGS I DO NOT UNDERSTAND. Thus today you are going to get a twofer.

There are plenty of things about the banking industry I do not understand.  One of these is the hullabaloe around the purposed reinstatement of the Glass-Steagall Banking Act.  Here is what I understand

The act was passed during the Great Depression as a mean to separate financial banks from public banks. Such measure would prevent the waves of panic that swept through the banking industry from totally engulfing the private sector.  (A brief aside: The U.S market is a mixture of the Free and Command Economy- just the public is allowed to follow the whims of the free market, while the Government controls and regulates the financial institutions that operate the markets) In the late 90's and early 00's, Republicans forced the repeal of the act, thus binding the two sectors together.  These de-regulations (a favorite term of Republicans) in-turn led to the complex schemes which caused the financial melt down.  What I am failing to understand, and what I assume is wrong with this picture is that now, with talk of bringing back the Act becoming a buzz, is why Republicans are opposed to the measure.

Understandably the Republicans want nothing more than to keep the act of the books because it would mean they were wrong in repealing it in the first place.  Admitting they are wrong is something Republicans do very well, but it is for the good of the country.  Dare our elected officials do anything to benefit the country.  Such a naive thought! There is however a benefit to the Republicans getting on board to bring back the law.  What could possibly be good about bring back a law that your party repealed?  Two words: Political Capital.

If the Republicans were to bring back the Glass-Steagall Act, they could claim that they were the party that fixed the economy.  Republicans want nothing more to be the party that "Saved The World." So why would they not seek measure to bring the act back? It is good for the country and good for the party.  Yes it means more regulations but it also means the market is allowed to operate as it freely as it wished.  Yes another of the Republican wet-dreams.


I may not be the quickest mind in the banking world, but when I see a good deal I try to take it.  Even though any Republican that votes for the reinstatement of the bill will take his philosophical lumps, he will have all the more political capitol when they stand for re-election as "someone who cares about main street." Maybe I am wrong and I don't understand fully the implications of what I am suggesting, but then again there is something that seems wrong about this picture