Now we’re begging: Will someone PLEASE bring back Glass-Steagall? The Glass-Steagall Act was, of course, the legislation passed in the early 1930s in response to a certain banking crisis that led to a particular Great Depression. Among other things, the Act erected a “Chinese wall” between a financial institution’s investment banking and merchant banking functions. In less complicated terms, the law forced banks to separate any business it was transacting on behalf of clients from the speculative moves it made with its own money. For the layman: banks can’t make dumb bets with clients’ money.

Sort of makes sense, doesn’t it?

Well apparently it seemed a bit stingy for President Clinton and the Republicans in Congress in 1999. We have Senator Phil Gramm and Representative Jim Leach to thank for that one. Here’s the problem: The heads of big banks have this terrible habit of thinking that they’re the smartest guys in the room. Anyone who doesn’t believe that need only watch Ben Bernanke talk for more than 30 seconds. Actually, let’s refine that a bit. The problem isn’t that banking executives think they’re savants, the real problem is that they aren’t.

In the modern financial age, a lot of very highly paid guys with impressive titles who look at way too many numbers and think they make sense have concocted some very complex “hedging” strategies for “managing risk.” They think they understand the crafty derivatives they’ve invented – which are completely unregulated and totally opaque – and all the counterparty risk involved. They don’t, and therein lies the rub.

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President Obama made a giant error in letting “never had a real job” Timmie Giethner and “heck of a job” Larry Summers slither around his administration’s neck in 2008.  Lucky us.

We must not make the same mistake.

We need to fix this thing… and Freedom Works’ Dick Armey is the man to do it.

That’s right–in the ultimate act of true bipartisanship, I want Dick Armey and Barrack Obama to agree we should re-instate Glass-Steagall.

In 1999, Glass-Steagall was repealed and commercial banks and investment banks were finally free to debt-molest us the “slack jawed rubes.”  Like incestuous Wonder Twins, they became Too Big Too Fail.

The problem with “bankruptcy” as a TBTF solution is that we cannot predict who will be in the White House or running Congress when the next financial crisis hits.  But with Glass-Steagall back in place, we have far less to worry about…. Goldman Sachs will no longer be our Treasury Department.

It also means we’ll be free to repeal Dodd-Frank Wall Street Reform without hearing Obama whine about consumer protections.

The fact is in ten short years, after we ended a 37 page law, we got screwed with our pants on, and replaced it with 2319 pages of VCR instructions (kids ask your parents) written by banker lobbyists to employ lawyers.

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For anyone who thinks that big Wall Street and Big Government aren’t joined at the hip, promoting policies and laws that keep each other fat and happy often at the expense of the American taxpayer, consider the career of Robert Rubin.

Rubin, of course, is largely gone from the public scene after spending 10 disastrous years as a board member and senior executive at Citigroup, the banking giant that epitomizes all that is wrong with American finance, and before that, a largely successful run as Treasury Secretary in the Clinton Administration, which he joined after running another controversial bank, Goldman Sachs. But his legacy looms large, mainly because I believe he was one of the reasons why the financial crisis occurred in the first place.

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