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The Volokh Conspiracy » Blog Archive » Dividing Financial Institutions into Utilities and Casinos?

One proposal for addressing too big to fail, or to systemically interconnected to fail, among financial institutions is to separate out the proprietary trading and other “casino” activities from the “utilities” business of commercial banking with the public. In some ways (not all) it is a revival of the Glass-Steagall approach. Paul Volker has urged such a policy, as have others.... Read moreOne proposal for addressing too big to fail, or to systemically interconnected to fail, among financial institutions is to separate out the proprietary trading and other “casino” activities from the “utilities” business of commercial banking with the public. In some ways (not all) it is a revival of the Glass-Steagall approach. Paul Volker has urged such a policy, as have others. The Obama administration has not so far shown any appetite for such it, preferring, in its Treasury blueprint for reform, to allow the functional interconnections within holding company structures, and identifying institutions that are regarded as too big or too systemically interconnected to fail and apply “regulation and last resort lending” to apply to them. View page