Glass-Steagall Redux: A Gift to M&A Bankers?

By James Kwak

The Chicago Tribune reports Fed's Fisher: Reorganize banks that are "too big to fail" U.S. authorities should reorganize the country's largest banks to protect against the risk of institutions that are "too big to fail" and that would saddle ordinary Americans with the cost of a bailout the next time they get in trouble, a senior Federal Reserve official said on Wednesday.

The Wall Street lobby in all its glory is fighting tooth and nail to defend its turf from the volley launched by former Fed Chair Paul Volcker. Recall that the newly designated Volcker Rule if implemented would disallow proprietary activities from those institutions taking consumer deposits. This implementation would effectively reinstitute the Glass-Steagall Act which was rescinded in 1999.

Zacks.com submits: On Monday, the Financial Times reported that JPMorgan Chase & Co (JPM) is undergoing preliminary negotiations to acquire a large Brazilian investment and hedge fund with Gávea Investimentos.

US President Barack Obama will on Thursday announce proposals to limit the size and scope of financial institutions, a senior administration official told AFP."A couple of months ago the president began discussing with his economic team the need to include in financial reform more specific and stronger provisions to limit the size and scope of financial institutions to cut down on excessive risk taking," the official said."(On Thursday) the president will announce a series of measures that address size and scope" of the institutions.

Mark McQueen (Wellington Financial) submits: Sometimes, a 1933-vintage idea survives the test of time.