My Glass-Steagall Tweetstorm

I almost never do tweetstorms, the form itself is utterly appalling. Especially when the tweets aren’t numbered and they appear in different people’s timelines in a disjointed, jumbled order.

But I accidentally did one this morning on the 83rd anniversary of the Banking Act of 1933, more commonly referred to as Glass-Steagall. On June 15th, 1933, with the nation in the throes of the Great Depression, there was some consensus on the part of economists, bankers and government officials that commercial lending institutions were too important to the real economy and real people’s jobs to be susceptible to the wild swings in the stock and bond markets.

We eventually unlearned this lesson and it’s been one of the driving factors for the state of the current economic and political situation.

My history lesson reconstructed from Twitter below:

83 years ago today, Congress passed Glass-Steagall Act, removing commercial banks from speculation, creating FDIC insurance and the FOMC.

— Downtown Josh Brown (@ReformedBroker) June 15, 2016

ironically, the big banks weren’t much opposed to be cut off from investments and trading. It was FDIC insurance they truly hated.

— Downtown Josh Brown (@ReformedBroker) June 15, 2016

The big banks who survived 1929 all understood why deposits should be kept safe from trading. They barely objected.

— Downtown Josh Brown (@ReformedBroker) June 15, 2016

The rural banks were really pushing for insured deposits. Rep. Henry Steagall of Alabama was their champion.

— Downtown Josh Brown (@ReformedBroker) June 15, 2016

In 1990, rumblings began under George H.W. Bush for repealing the act and letting national banks come back to the poker tables.

— Downtown Josh Brown (@ReformedBroker) June 15, 2016

And then in the late 1990’s, Sandy Weill merged Citibank, Travelers and Smith Barney, practically daring the government to stop him.

— Downtown Josh Brown (@ReformedBroker) June 15, 2016

By 1999, President Clinton was signing Gramm-Leach-Bliley, repealing Glass Steagall and firing the starter’s pistol.

You know the end.

— Downtown Josh Brown (@ReformedBroker) June 15, 2016

70 years of safeguarded commercial lending wrecked in under 8 years. Sandy Weill admitted he was wrong. The economy has still not recovered.

— Downtown Josh Brown (@ReformedBroker) June 15, 2016

Whether you’e mad about Trump, inequality, Obama or negative interest rates, you now know the origin story of our current situation.

— Downtown Josh Brown (@ReformedBroker) June 15, 2016