Republican presidential candidate Jeb Bush said he would consider reinstating a major Wall Street regulation, showing more willingness to police the financial sector than he has on the campaign trail to date.
“I’m open to the idea” of reinstating the Glass-Steagall Act, the former Florida governor said Monday at Alton American Legion Post #72 in Alton, New Hampshire.
But Bush said he preferred other ways to safeguard against risks to the entire economy.
“The simple, fastest way to deal with this is probably to raise capital requirements for larger banks,” he said. “That would be the best step going forward.”
The Glass-Steagall Act, enacted during the Great Depression, created a strict separation between high-risk investment banks and deposit-based commercial banks. The theory behind it was that banks had gambled with ordinary consumers’ savings, plunging the entire economy into a depression when their bets did not pay off.
President Bill Clinton signed a law repealing Glass-Steagall in 1999, paving the way for the rise of the megabanks at the heart of the subprime mortgage bubble and other reckless behavior in the 2000s. Many consumer advocates, economists and progressive Democrats blame Glass-Steagall’s repeal for contributing to the financial crisis.
Others, including former President Clinton, dispute the claim, arguing that the degree to which a bank combined commercial and investment banking practices was a less decisive factor in the crisis than the specific risks it took.
Regardless, Bush’s indication that he would even contemplate reinstating the law not only suggests that he's more pro-regulation than his Republican rivals, but apparently makes him more progressive on the issue than Democratic front-runner Hillary Clinton.
Clinton’s financial reform plan would not reinstate Glass-Steagall’s separation between investment and commercial banking. Her Democratic competitors, Sen. Bernie Sanders (I-Vt.) and former Maryland Gov. Martin O’Malley, ardently back reviving the firewall regulation.
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