The fact that two leading European news financial-economic dailies, Germany’s Handelsblatt and Switzerland’s Neue Zürcher Zeitung, mention the Glass- Steagall option —even without clearly committing themselves to it, and only mentioning it amongst other, useless approaches such as “ringfencing” — is evidence of an intense debate behind the scenes on separating depository banks from the speculative investment or merchant banks.
Germany’s Handelsblatt editorial team pointed out two days ago that under the bank-separation system, based on the U.S.’s original Glass-Steagall Act, investment banks are to be separated from commercial banks. They note that critics of the global financial crisis of 2008 blame the repeal of Glass-Steagall in 1999.
Neue Zürcher Zeitung, three days ago also favored non-separation, but conceded: “The most obvious solution, which is now being pushed again by the left, but is also gaining supporters among the bourgeoisie, is to split up the big banks. One part would house the ‘risky’ investment banking, such as trading in stocks, bonds and derivatives. The other part would concentrate on the ‘boring’ deposit and credit business, such as the cantonal banks or Raiffeisen banks. Such an order has an historical model: The so-called banking separation system was introduced in the U.S. in 1933, and thus, a few years after the Great Depression, with the Glass-Steagall Act, but was repealed in 1999 under President Bill Clinton.”
