The Teamsters have long called for financial reform. Now a
retired Citigroup chief executive who was once one of Wall Street’s biggest
proponents of the creation of mega-banks has seen the light. John Reed, who led
Citigroup from 1984 to 2000 and then served as the head of the New York Stock
Exchange, now says banking rules need to be changed to avoid another economic
crash.
Well, better late than never.
Reed led Citigroup -- one of the nation’s largest banks -- when it was ramping up in size. He pushed for a repeal of the Glass-Steagall Act when Citi wanted to dabble in both investment and commercial banking,
which was barred under the law. So in 1999 he and his big banking friends got
it changed. But he now says the current business model is broken and the law
needs to be reinstated.
Sens. Elizabeth Warren (D-Mass.), John McCain (R-Ariz.),
Angus King (I-Maine) and Maria Cantwell (D-Wash.) introduced an updated version of Glass-Steagall in July that attempts to rein in the
financial chaos of Wall Street. It would
require banks that accept federally insured deposits to focus on traditional
lending and not engage in more risky securities trading. But now the lawmakers
need to move the process forward.
The current law allows banks to gamble customers’
hard-earned dollars in shady dealings like the creation of derivatives that
puts workers’ money at risk.
While filing legislation that would prevent many of the
financial failings that led to the bank bailouts is a good first step, a bill
alone isn’t enough. Congress must take action now. Failing to do so will ensure
a repeat of the financial meltdown of 2008.
Stay tuned...
