The Case For A Super Glass-Steagall | Stockman

``[A Super Glass-Steagall] would cap U.S. banks at $180 billion in assets (<1% of GDP) if they wished to have access to the Fed's discount window and have their deposits backed by FDIC insurance. Such Federally privileged institutions would also be prohibited from engaging in trading, underwriting, investment banking, private equity, hedge funds, derivatives and other activities outside of deposit taking and lending. breaking up the big banks and putting Wall Street back on a free market based level playing field is the right thing to do. Today's multi-trillion banks are simply not free enterprise institutions entitled to be let alone.''

Stockman is right on with this piece. And speaking of the foundations of the financial crisis and current predicament we are in today, we were saying this part 10 years ago:

...one of Greenspan's most deleterious actions was to essentially reduce cash reserve requirements to zero. Owing to the release of such immobilized assets, of course, banks became more profitable. Yet the ultimate cost of keeping the banking system liquid was not eliminated; it was just transferred to public institutions including the Fed, FDIC and eventually the US Treasury via TARP.

All of these violations of free market discipline have had a cumulative historical effect that's no longer tolerable. And these distortions, disincentives and moral hazards were immensely compounded by two decades of monstrous bank merger roll-ups that resulted in incomprehensible and unmanageable financial services conglomerates like Citigroup.