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ESSAY
A Better Way to Revive Glass-Steagall
John Crawford
Introduction
The financial crisis of 2007-2008 repeatedly forced regulators to face
terrible choices between risking catastrophic contagion by letting particular
firms or markets fail, and intervening to bail them out.1 One explanation of
why these dilemmas arose was that financial firms were too big to fail. Nearly
a decade after the onset of the crisis, the major financial conglomerates in the
United States are in many cases larger than they were in 2007.2 Figures as
politically diverse as Donald Trump, Elizabeth Warren, John McCain, and
Bernie Sanders all agree on a (partial) remedy: the revival of the Glass-Steagall
Act, the Depression-era law that placed a firewall between the activities of
commercial banks and investment banks.3 By revival, supporters mean
reinstating Glass-Steagall's provisions prohibiting investment banks from
affiliating with depository institutions-a prohibition that was eliminated in
Professor of Law, University of California Hastings College of the Law.
1. See generally FIN. CRISIS INQUIRY COMM'N, THE FINANCIAL CRISIS INQUIRY REPORT, 280-
386 (2011), http://fcic-static.law.stanford.edu/cdn-media/fcic-reports/
fcic-finaLreportfull.pdf (describing a series of such dilemmas during 2008).
2. For example, total assets for JPMorgan Chase & Co. came to S 1.562 trillion at year end
2007, and to S2.49 trillion at the end of 2016. SeeJPMorgan Chase & Co., 2016 Annual
Report (Form 10-K) 43 (2017), https://investor.shareholder.com/common/
download/sec.cfm?CompanylD=ONE&FID=19617-17-314&CIK=19617; JPMorgan
Chase & Co., Annual Report (Form 10-K) 26 (2008), https://
investor.shareholder.com/common/download/sec.cfm?CompanylD=ONE&FID= 119
3125-08-43536&CIK=19617.
3. Glass-Steagall refers to the Banking Act of 1933, §§ 16, 20, 21, 32, 12 U.S.C. §§ 78, 377
(1998) (repealed 1999) (current version at 12 U.S.C. §§ 24, 378(a) (2015)). Regarding
popular support for a return to the law, see Donna Borak, Elizabeth Warren and Trump
Agree on One Thing: Break Up the Banks, CNNMONEY (Apr. 7, 2017, 2:46 PM ET),
http://cnnmon.ie/2o57qnb (reporting that Warren reintroduced a bill with McCain
and two other senators to reinstate Glass-Steagall, and quoting an analyst's view that
[a]t some point the market is going to have to accept that the Trump administration
is serious about restoring the Glass-Steagall separation between commercial and
investment banking); Kevin Cirilli, Sanders Backs Reviving Glass-Steagall, THEHILL
(Jul. 7, 2015,6:39 PM EDT), http://thehill.com/policy/finance/248407-sanders-backs-
reviving-glass-steagall (reporting on Sanders's support for a return to Glass-Steagall).
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