June 20, 2017–Credit unions around the country are beginning to take notice of the Congressional debate on restoring Glass-Steagall. An article in the June 21st edition of the Credit Union Times by the CEOs of two credit unions issued a call for “credit unions, credit union leagues and our two national trade associations” to “join together with one voice on this important debate of a 21st Century version of Glass-Steagall.”
“To ignore it could leave our industry, our members and our entire country open to a repeat of the crisis of 2008,” the article concludes.
The article identified the May 18 confrontation between Sen. Elizabeth Warren (D-MA) and Treasury Secretary Steve Mnuchin as the “official start” of the debate on the matter. That was the hearing where Mnuchin claimed that the Administration supported a version of Glass-Steagall that did not separate commercial from investment banking—a statement which Warren characterizes as “something straight out of George Orwell.”
While authors Kathy Geary, president/CEO of Democracy FCU, and Bernard McLaughlin, president/CEO of Point Breeze CU, do not identify precisely what version of Glass-Steagall they espouse, they are clear that the revival of a version of Glass-Steagall separation between commercial and “risky” investment banking needs to occur.
The activation of credit unions (and their members) would be especially important for mobilizing support for the House (H.R. 790 and H.R. 2585) and Senate (S. 881) bills to reinstate Glass-Steagall. As H.R. 790 main sponsor Marcy Kaptur (D-Ohio) has frequently pointed out, at least half the credit unions in operation in the 1990s have disappeared. A similar, if not worse, debacle has occurred with the independent community banks, whose association has at some points supported the return of Glass-Steagall. Two-thirds of the community banks in operation during the 1990s have gone out of business.
At present there are 53 sponsors of the Kaptur bill, 9 for Rep. Michael Capuano’s H.R. 2585, and 9 for Sen. Warren’s S. 881 (21st Century Glass-Steagall Act). The issue is also live in state capitols around the nation, with resolutions for the revival of Glass-Steagall having been introduced in 17 states.
It would be wise for all these supporters to heed the alert from the Credit Union executives to act “with one voice” for a return to Glass-Steagall: “To ignore it could leave our industry, our members and our entire country open to a repeat of the crisis of 2008.”