On Other Blogs Today: Does Reinstituting Glass-Steagall Make Sense? Is Seattle Warm? And Other Questions.
1. Yesterday, we reported on US Sen. Maria Cantwell's populist proposal to reinstitute the Glass-Steagall Act, an FDR-era provision that was shelved late in the Clinton administration, that had put a firewall between commerical banking and investment banking. Glass-Steagall was inteneded to protect bank customers from risky Wall Street speculation.
We characterized Cantwell's effort—co-sponsored with US Sens. John McCain (R-AZ), Elizabeth Warren (D-MA) and Angus King (I-ME) —as Quixotic; Cantwell and McCain tried to do the same thing in 2010 (and failed) and moreover, we couldn't even get Cantwell's Democratic seatmate, US Sen. Patty Murray (D-WA), to say whether she liked the populist idea or not.
Now comes an extra-brainy article on the Washington Post's WonkBlog which wonders if the catchy-sounding idea (I told Cantwell's staff it read more like a messaging bill than winning policy) even makes sesne.
This WaPo must read (which offers the clearest explanation of Glass-Steagall I've come across) concludes:
The theory [of allowing commercial and investment banks to affilate] was that allowing different kinds of financial activity would allow companies to diversify their risk. If investment banking is tanking one month and commercial banking’s doing all right, then the latter can blunt the impact of the former. That reduces risk, rather than exacerbating it. That obviously didn’t happen, but that doesn’t mean the underlying idea was necessarily wrong.
So it really matters what problem Warren-McCain [and Cantwell; the Post downplays her role] is meant to solve. If its intent is to break up the big banks, then there’s a question of whether or not we should just cap the size of them, rather than dictating what kind of banking the now-smaller banks can and can’t engage in. If the intent is to split up investment and commercial banking, regardless of scale, then it’s worth considering whether the privacy benefits [preventing the investment side from having inside info about commercial lending] and other benefits ... are outweighed by the diversification advantages of merging different kinds of financial businesses.
2. Curbed links to a blogger who interpeted Google searches to determine the prevailing stereotypes of different U.S. cities.
Seattle is: "liberal," "cloudy," "expensive," and "warm."
Curbed's appropriate headline: "Why is Seattle so...Warm?"
3. Capitol Hill Seattle raises some questions about cost and effectiveness of the the city's plan for fiber optic cable internet, but doesn't get many answers from the company that's partnered with the city, Gigabit Squared.
They do hear from a Gigabit Squared competitor, though.