Senate Event: Hoenig, Simon Johnson Say Glass-Steagall Necessary Now

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Senate Event: Hoenig, Simon Johnson Say Glass-Steagall Necessary Now

July 19, 2013 • 9:08AM

At a briefing in the Senate Dirksen Building on Thursday, FDIC vice-chairman Thomas Hoenig said the Senate should pass the Glass-Steagall restoration bills introduced into it recently, S 985 and/or S 1282; and former IMF chief economist Simon Johnson concurred that re-enacting Glass-Steagall is necessary. The briefing was sponsored by the Main Street Alliance and Americans for Financial Reform.

The third speaker at the briefing, Sen. Sherrod Brown (D-OH), did not call for the Glass-Steagall bills to pass.

Hoenig, publicly escalating his longstanding support for Glass-Steagall principles, wasreported by The Hill to say that legislation is necessary now, to prevent the FDIC from insuring banks' risky trading with a federal safety net. "What I proposed, and what I think is reflected in the bills that have been introduced, is a separating out," he said.

Dr. Johnson agreed that the legislation is necessary now. "Bringing back a modernized version of Glass-Steagall would contribute in a significant way to splitting the financial system into a safe part that you absolutely have to back up, and a relatively dangerous part where people can make money or lose money," he said, again as quoted by The Hill.