New Jersey Senate Bill SR49

New Jersey 2022-2023 Regular Session

• Introduced: 2/10/22
• Refer: 2/10/22

Caption

Urges Congress to reinstate "Glass-Steagall Act."

Impact

The reinstatement of the Glass-Steagall Act is regarded as a necessary step to bolster the current financial system against similar future crises. The resolution mentions that despite the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was enacted after the recession to address its causes, the fundamental issues of separation between commercial and investment banking were not fully resolved. This means the risk of speculative activities fueled by financial conglomerates still persists, posing dangers to economic stability.

Summary

Senate Resolution No. 49, introduced by Senator Shirley K. Turner in February 2022, urges the United States Congress to reinstate the Glass-Steagall Act. This act was originally enacted in 1933 to prevent the speculative practices that led to the collapse of the banking system during the Great Depression, primarily by establishing a separation between commercial and investment banking. The resolution highlights that the repeal of the act in 1999 allowed commercial banks to merge with investment firms and other financial services, resulting in irresponsible financial behaviors that significantly contributed to the 2008 financial crisis and recession.

Contention

Discussions around this resolution are likely to reflect a division in perspectives regarding financial regulation. Proponents of reinstating the Glass-Steagall Act argue that it would reestablish necessary safeguards within the banking sector. Opponents may contend that the financial landscape has evolved, and that the current regulatory frameworks, despite their flaws, could be modified without completely reverting to prior laws. Thus, the resolution has the potential to ignite debates about the best approaches to financial stability and regulation in the present day.