Paul Volcker Finds a Hammer - Economix Blog - NYTimes.com:

Mr. Volcker, a legendary former chairman of the Federal Reserve Board with much more experience with Wall Street than any current policy maker, was blunt: We need to break up our biggest banks and return to the basic split of activities that existed under the Glass-Steagall Act of 1933 — one highly regulated (and somewhat boring) set of banks to run the payments system, and a completely separate set of financial entities to help firms raise capital (and to trade securities).

Not sure it will cure all our ills, and it will take a while to untangle the mess, but this seems to be a good (and relatively easy) place to start.

Maria Cantwell and John McCain think so, too.

The pen with which President Clinton signed the Gramm-Leach-Bliley Act of 1999 which repealed part of the Glass-Steagall Act of 1933 hangs as a trophy in Citigroup's headquarters.

When Bill Clinton gave that pen to Sanford Weill, it symbolized the ending of the twentieth century Democratic Party that had created the New Deal.

I have read several times "introduced a bill," but I can't yet find any record of it. Even if the two Senators actually write one I think the chances of it passing are about equal to the chances of having Sanford Weill's head on a stick on the White House lawn (about 41-59).

It's going to be interesting to see what actually gets done in 2010 after the Great Ideology Swapmeet of 2009.

Yes.

Sorry, Paul.

I don't want [commercial banks] out doing a lot of speculative trading.

So does this mean we should restore Glass-Steagall?
No. That's a false statement people make about my position. Glass-Steagall basically said banks cannot underwrite corporate securities or deal with corporate securities. But I would let commercial banks do underwriting of corporate customers. So you could argue that what I propose is somewhat in the spirit of Glass-Steagall in making a distinction between capital-market activities and trading activities and banking activities. But it is not specifically going back to Glass-Steagall.

Do you think that Congress will see it your way?
Eventually, yes. They need a little more persuasion.

So why haven't your views prevailed with the Administration?
I wasn't persuasive enough.

Volcker's persuasion tour: Where in the world is Paul today?