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Rep. Emanuel Cleaver to SEC Chair Mary Jo White: ‘What About Glass-Steagall?’

March 25, 2015 (EIRNS)—Rep. Emanuel Cleaver (D-Mo.) today posed the question to Securities and Exchange Commission Chair Mary Jo White, during the House Financial Services Committee hearing this morning, if Glass-Steagall would not be a useful tool in preventing a financial crisis. The exchange went as follows:

Rep. Cleaver: There is seemingly always, since I’ve been here, the bubbling up of interest in somehow reinstating the Glass-Steagall provisions. And, actually, some of us, at least, struggled to try to get it inserted into Dodd-Frank—unsuccessfully, I might add—in Sections 20 and 32, which deal with the Consumer Protection component.

But the argument has continued, and I’m interested in your opinion.

Some would say the fact that we had the 2008 collapse was due in no small part to the failure to separate commercial banking from investment banking. And, as you probably know, there are bills pending now; there are bills that have been introduced.

Unlike some Federal Reserve Chairs who publicly oppose Glass-Steagall, White responded as follows.

SEC Chair White: I think on that issue, that really is a legislative judgment to make. Clearly, all the regulators since the crisis have been very focussed on reforming the existing system with the tools we’ve been given to use, and I think they have been used quite effectively in most cases and quite vigorously. But I think that judgment is really for the Congress.

Cleaver: So the SEC, obviously, wouldn’t have a position. It’s a legislative judgment on a Congressional issue, but let me ask the question another way, though I think I can predict what your answer will be. Would the SEC find it easier to do its job if we had a separation between commercial and investment banking?

White: It would depend on what else went with that, I suppose. I don’t think I can really comment on that. I would have to see the precise parameters of it. I think all of our jobs are difficult and challenging, under any regime.

Cleaver: Thank you. They are. I appreciate your answer; I had hoped, but I didn’t think, I would get an answer.