The Depression-era Glass-Steagall Act may live again, if Senators John McCain (R-AZ) and Maria Cantwell (D-WA) have anything to say about it.

Glass-Steagall, introduced in 1933, separated commercial and investment banking, essentially prohibiting institutions from using consumers’ deposits for risky bets on the stock market — one of the main causes of the depression, it’s proponents said. However, it was repealed in 1999 with passage of the Gramm-Leach-Bliley Act.

ADVERTISEMENT

Were it reintroduced today, it could fundamentally change the structure of many U.S. financial institutions.

The senators’ proposal was echoed by a failed amendment sponsored by “Maurice Hinchey of New York, John Conyers of Michigan, Peter DeFazio of Oregon, Jay Inslee of Washington, and John Tierney of Massachusetts,” according to Shahien Nasiripour, writing for Huffington Post.

“The law’s repeal ushered in an era marked by big banks getting even bigger,” he continued. “The country’s four largest — Bank of America, JPMorgan Chase, Citigroup and Wells Fargo – now control more than half of the nation’s mortgages, two-thirds of credit cards and two-fifths of all bank deposits.”

While over 50 financial regulatory reforms are being considered in the United States and Europe, not a single one would truly “transform” market operation, Bloomberg reported. Even John S. Reed, former co-CEO of Citigroup, agrees that Congress was wrong to repeal Glass-Steagall, the publication continued.

“Resurrecting Glass-Steagall would reduce the need for the taxpayer bailouts that added between 9 percent and 49 percent to the profits of the 18 biggest U.S. banks in 2009, according to Dean Baker, co-director of the Center for Economic & Policy Research in Washington,” Bloomberg added.

ADVERTISEMENT

Think Progress noted: “Plus, House Majority Leader Steny Hoyer (D-MD) said today that House Democrats are ‘considering reinstituting the Depression-era Glass-Steagall Act,’ which placed a regulatory wall between depository institutions and investment banks, preventing financial conglomerations like Citigroup from coming into being ‘As someone who voted to repeal Glass-Steagall, maybe that was a mistake,’ Hoyer said.”

The Obama administration is opposed to a reinstatement of Glass-Stegall. To that effect, Newsweek added:

Obama administration officials have dismissed the idea that the financial sector should or can be changed in more fundamental ways than they are now proposing. You can’t turn back the clock, they say, and the new requirements they plan to impose on big banks to hold more capital in reserve, put up $150 billion for a rainy-day rescue fund, and disclose more of their risky trades should be enough to keep the financial sector from imploding again. Many of these requirements, among others, are contained in two giant bills making their way through Congress—one that passed the House last week and another that will be debated in the Senate in the new year. “I think going back to Glass-Steagall would be like going back to the Walkman,” says one senior Treasury official.

ADVERTISEMENT

“Senator Carter Glass, a former Treasury secretary and the founder of the U.S. Federal Reserve System, was the primary force behind [Glass-Steagall],” explained Investopedia, a Forbes Digital company. “Henry Bascom Steagall was a House of Representatives member and chairman of the House Banking and Currency Committee. Steagall agreed to support the act with Glass after an amendment was added permitting bank deposit insurance (this was the first time it was allowed).”