Posted on 10/18/2023 3:43:37 AM PDT by Cronos
Italian Prime Minister Giorgia Meloni's party has presented a bill in parliament to separate retail and investment banks in a move that, if approved, would force a radical overhaul of the country's banking sector.
The proposal by the Brothers of Italy (FdI) party comes in the wake of the collapse of U.S. tech lender Silicon Valley Bank (SVB) and the emergency takeover of Credit Suisse by banking rival UBS, which raised fears of systemic stress that could lead to more bank failures.
The draft law, seen by Reuters on Wednesday, would give banks 12 months to reorganise their operations and choose between commercial and financial investment activities.
Quietly introduced to the lower house of parliament on March 17, the bill is sponsored by the head of FdI in the lower Chamber of Deputies, Tommaso Foti, and 14 party colleagues, including former Economy Minister Giulio Tremonti.
FdI proposed a near-identical law in 2018, when the party was in opposition and with Meloni as the bill's chief sponsor, but it did not go past committee stage and never reached the floor of the house for approval.
....The overhaul would de-facto reintroduce 1930s-era legislation scrapped in the 1990s by deregulation reforms that some left- and right-wing politicians blame for contributing to recent financial crises.
Allowing retail banks to engage in "speculative trading" is "dramatically negative for the real economy and undermines the most elementary principles of safeguard for the social and ethical foundation of the economy," the FdI bill states.
In the United States, calls for similar reforms, with the reintroduction of the 1933 Glass-Steagall Act that separated commercial and investment banking before World War Two, have come from left-wingers within the Democratic Party, such as Senator Elizabeth Warren.
(Excerpt) Read more at reuters.com ...
They should reinstate the Glass-Stegall Act, if you look at the years since it’s repeal, the banking system has gone from one major crisis after another.
I don’t hear about anyone trying to reinstate it. It’s just forgotten.
I was never in agreement with the verticle integrations in the finance industry. Each segment, from retail banking, to investment brokerage operations to investment banking to insurance has its own specific fiduciary responsibilities and the corporate world can claim all it wants about protecting those different responsibilities in a vertically intergrated financial conglomerate, but I just don’t believe that reality endorses that idea; I believe those seperate fiduciary responsibilities get compromised for the “greater good” of the conglomerate.
Rescinding it was one of the worst mistakes we ever made.
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