An Indomitable Maria Cantwell is Back with a Glass-Steagall Posse

U.S. Senator Maria Cantwell (D-WA) has joined senatorial forces with Elizabeth Warren (D-MA), John McCain (R-AZ), and Angus King (I-ME) to introduce a bill they’re calling a “21st Century Glass-Steagall Act,” an updating of the Banking Act of 1933 (Glass-Steagall), which was gradually rendered toothless during the go-go 1980s and 1990s, and repealed in 1999.

“Too many Main Streets across America have paid the price for risky gambling on Wall Street,” Senator Cantwell said in a news release describing the new bill’s purpose. The release goes on to say:

The legislation introduced today would separate traditional banks that have savings and checking accounts and are insured by the Federal Deposit Insurance Corporation from riskier financial institutions that offer services such as investment banking, insurance, swaps dealing, and hedge fund and private equity activities.

It’s not Cantwell and McCain’s first attempt to restore Glass-Steagall; the two gave it a try in 2009 and 2010. But as election year 2012 grew closer, Senate Democrats grew less supportive of taking on Wall Street. (Not Cantwell.)

In the aftermath of the Great Depression, walling off consumer banking from investment banking had gained broad support. But even FDR was on the fence about the Act’s most famous provision, the creation of federal insurance for depositors. To coax people into returning their money to banks, even that bitter pill was swallowed.

Today, no one’s complaining much about the FDIC. But plenty of megabanks boasting both consumer and investment divisions picture a new Glass-Steagall as a giant cleaver. And Sen. Warren, perhaps, swinging it at them: “The four biggest banks are now 30 percent larger than they were just five years ago,” Warren argues, “and they have continued to engage in dangerous, high-risk practices that could once again put our economy at risk.”