The Glass-Steagall Act had been around under the Banking Act of 1934 until it was terminated during the Clinton administration. It separated regular banking activity from investment banking.
A similar law can probably be passed, without all the talk that casts gloom over industry and finance and sees to it that we remain in a deep recessionary funk longer than we ought.
Problem: It is easier to talk about, than legislate the separation of investment banking and ordinary banking, once the two have been so connected for years.
The question of proprietary trading arises. Both regular and investment banks execute such trades, ordinary banks to a lesser extent. Moreover, such trading generally represents a very small, insignificant amount of activity and income.
Furthermore, the definition of what is a proprietary or “prop” trade is hard to delineate.
The result we get, with all our populist politicians, and, it now appears, the Number One Populist in the White House, we have bombast, finger-pointing, and economic panic and damage.
We will probably wind up with a new version of old Glass-Steagall, named in honor of the politicians who introduce it.
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