70 Stan. L. Rev. Online 1 (2017-2018)

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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   (1998) (repealed 1999) (current version at 12 U.S.C.  24, 378(a) (2015)).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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