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We're joined now by senator Elizabeth Warren Democrat of Massachusetts who wants to read and produce Glass-Steagall.
The depression -- -- that.
That separated investment banks from commercial -- senator why do you want to do that.
Well let's just remember the history.
Everything crashed apart and in 1933.
One of the solutions was to put in place a -- this with Glass-Steagall between ordinary banking checking accounts savings account.
And the risk taking you do on Wall Street.
Big wall and it stayed in place for fifty years and we didn't have any of the banking crises at all kind of work.
And then what happens now is the banks wanted to access.
To the profits to get from taking those risks and the risk takers want access to the money in -- checking accounts savings account -- -- -- that's right the insured deposits and so they started hammering.
On Washington to weaken regulations.
The regulators started creating loopholes and Glass-Steagall and then in 1999.
Ultimately congress just got rid of what was left.
As you know we had a big crash in 2008.
And one of the things we talked about -- lots of people talked about is that there was too much concentration.
In the banking industry.
Here's the problem today.
The big banks the big four -- 30%.
Bigger than they were in 2008.
And so what this is about Ecstasy in the world without I have that wall and place -- go take -- risks go.
And -- -- don't do what you want to do on the investment side.
But the banking -- it needs to -- boring and those insured deposits need to stay off limits but the risk.
Version we're dirty hearing from critics -- saying that had less people been in place in 2008 it would not a from and prevented the financial crisis that the companies that failed -- Fannie Mae Freddie Mac Lehman Brothers.
Bear Stearns countrywide.
The country's but the company's we bailed out -- Citibank Bank of America Wells Fargo those are the ones who got the big TARP money.
Too big to fail is something that's going to take a lot of pieces to be able to solve it I don't kid myself on that.
-- as part of that it's dialed some of the risk out of the system we're getting -- higher capital requirements which I think is really good.
But the point is it takes more.
And what this is about is one more way to bring down the size.
Of -- -- -- integrated financial institutions.
And separate them -- of the risky part is separated from what should be the boring part.
It's one tool in the tool box an important tool but it's just one tournament.
You would do what you would break these guys break them apart -- the investment banking division.
-- Citi or Bank of America.
Merrill Lynch would have to be spun out and separated from the -- of commercials that are martial.
That's exactly right and we took them five years to do so it's not like you flip the switch it's in the bill and they have five players to be able to smooth the path to get those two separated from traffic.
What about the prospects for the legislation have four cosponsor usually that's three coast artillery.
Are you getting any interest from any other senator we are -- partisan Republican and Democrat.
But I have to guess I have to tell you here's the fun part.
About what cosponsor and this is John McCain you couldn't ask for a better fighter to get out there and really get -- be willing to to get in -- on it.
And I want to say on John McCain.
He's been on this issue about glass -- for -- long time.
I was too before I ever came to the United States senate so the first time we -- had a chance to sit down.
This was this was our moment to get together and talk about it and and we decided on the spot.
To work together on Glass-Steagall.
-- -- Angus King an independent from Maine the -- Maria Cantwell from Washington.
And here's what's interesting we decided we're going to fight for this.
We've already started receiving calls from -- senate offices saying they want to be part of it too and that's from both sides behind we're about over on the house.
So right now we're concentrating on cents I think we've got a lot of friends -- -- house I think that's the thing about Glass-Steagall and that's the point here.
This isn't Democrats are on -- -- -- Republicans.
This is one that really -- is now.
This is a question fundamentally.
If people want to take risks financial institutions want to get out there and they want to gamble on.
Derivatives are on swaps are on whatever exotic thing that someone's created.
This doesn't say they can't do it.
It just says you don't get taxpayer backed money to do.
Not our checking accounts savings accounts that are insurance -- -- FDIC.
These are two very different kinds of financial businesses.
And so commercial banking should be Walt doesn't the vocal Volcker Rule to some of that it does sound of it I think you look at the right way it's some -- -- This is not okay and remember we don't have a good strong vocal rule in place yet.
This one says.
Creative well everybody will understand them and let's get these two separated.
Finally to get something like this signed into law and a good friend in the White House as well.
Have you heard anything from the White House at this point.
It does with the president does the president support that.
Haven't asked yet it out but I think the real point is just happened to talk about the watching.
I think most people fundamentally again it and remember we've got a good history.
We had a very boom box banking system before nineteen -- three.
We put some good regulations in place and with fifty years.
With -- major crash.
Fifty years when we -- strengthened America's middle class.
It worked for us and then we started -- -- spreads out and letting the financial institutions.
Take on more and more risk and we ended up paying a price morning.
Now we've got to get that -- happens.
It was a democratic senator did achieve -- democratic.
President President Clinton signed the repeal of countless people in the long.
That's -- and I think it was wrong but do keep in mind because this is important.
For the time they repealed in 1909.
-- it was a -- -- -- The regulators.
But one loophole in after -- not so I'm not look from -- anybody.
It was a week and weekend weekend Glass-Steagall law and then finally open now.
We need strong plastic and if you let me put in a pitch for it.
That's what our 21 century Glass-Steagall law passed it doesn't just use the same language from 1933.
-- -- -- hard.
It takes those loopholes that got created and stitches them all clients.
And it says new kinds of financial instruments that didn't even exist back in 1933 it explicitly calls the mountains they know they are not part of -- much.
Credit default swaps derivatives.
Exactly right senator Elizabeth Warren thanks for joining Fox Business to thank you it's good to be here.
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