And here I thought my Master’s thesis in banking policy would sit, dusty, on a shelf in perpetuity. (Hey, any ray of light during this crisis, right?)
The Fed effectively killed Glass-Steagull today by allowing the last two remaining investment banks — Goldman Sachs and Morgan Stanley — to convert themselves into Bank Holding Companies. Instead of being subject to SEC regulation, the banks will now be subject to Fed oversight.
It’s interesting to note that Glass-Steagull was originally enacted to prevent the worst excesses of the Robber Baron era from recurring. In particular, the practice of the commercial banking arms of a financial institutions lending its own investment bank money and then using assets it issued itself to underwrite consumer lending.
Crazy days, folks. Crazy days.