Hinchey Reintroduces Bill to Break Up MegaBanks that Caused Financial Crisis
The Glass-Steagall Act was repealed in 1999 by the Gramm-Leach-Bliley Act, which Hinchey strongly opposed and voted against. That bill paved the way for the establishment of super-sized banks that serve as both commercial lending institutions and investment companies. Today, just four huge financial institutions hold half the mortgages in America, issue nearly two-thirds of credit cards nationwide, and control about 40 percent of all U.S. bank deposits. In addition, the face value of over-the-counter derivatives at commercial banks has grown to $290 trillion and 95 percent of those derivatives are held at just five financial institutions.
Hinchey recently sent a letter with nine other U.S. House members, urging Federal Reserve Chairman Ben Bernanke to prevent Wall Street banks from sidestepping a new rule designed to prevent commercial banks from engaging in proprietary trading. The new rule, called the Volker Rule, is a weaker version of the Glass-Steagall reform Hinchey is again seeking to restore. Earlier this year, Hinchey urged Bernanke to swiftly implement the Volker Rule.
In December 2009, Hinchey offered an amendment to the Wall Street Reform bill that would have restored the Glass-Steagall Act as part of the broader financial regulatory reform legislation. That amendment was blocked from coming up for a vote before the full House.
In the previous session of Congress, Hinchey introduced the Too Big to Fail, Too Big to Exist Act, which would require the Secretary of the Treasury to dismantle any U.S. financial institution deemed to be so big that its potential collapse would undermine the entire U.S. economy.