Say this for Phil Gramm: the man sticks to his guns.
Thirteen years after helping to repeal the Glass-Steagall Act and under widespread criticism, Gramm still insists it was the right move.
The former Texas Senator told Bloomberg News on Wednesday that he doesn't see "any evidence" that rolling back Glass-Steagall, Depression-era legislation that put up a firewall between commercial and investment banks, "had anything to do with the financial crisis."
Gramm's remarks this week come in the wake of a shocking about-face from Sanford Weill, the former Chairman and CEO of Citigroup who was, in the late nineties, instrumental in ending Glass-Steagall. On Wednesday, Weill told the hosts of CNBC's Squawk Box that he now believes more sequestration in banking is a good idea.
"What we should probably do is go and split up investment banking from banking, have banks be deposit takers, have banks make commercial loans and real-estate loans, have banks do something that’s not going to risk the taxpayer dollars, that’s not too big to fail,” Weill said.
Passed in 1933, Glass-Steagall for six decades kept commercial banks separate from Wall Street, and ordinary people's money more or less safe from the vagaries of the financial sector. That all changed in 1999, when a law devised by Sen. Gramm and two other Republican legislators -- Rep. Jim Leach and Rep. Thomas Bliley -- removed the barrier and allowed banks to act as both commercial and investment entities.
The absence of Glass-Steagall probably didn't, by itself, cause the financial crisis of 2008. But consensus among economists, analysts and even some bankers has been that it certainly didn't help to have that protection removed.
As for Gramm, this isn't the first time he's defended the repeal. In 2009, when the economy was still reeling from the near-collapse of the banking system, Gramm told an audience that "Europe never had Glass-Steagall" and yet the financial crisis hadn't originated there.
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