The 1999 repeal of the Glass-Steagall Act, a law passed in 1933, allowed banks to begin using federally insured deposits as chips in a big investment casino. Those risky investments helped lead to the financial crash at the end of the George W. Bush administration from which the United States is still recovering.

Now Senators Elizabeth Warren (D-Massachusetts) and John McCain (R-Arizona)—along with Senate co-sponsors Angus King (I-Maine) and Maria Cantwell (D-Washington)—have introduced legislation that would restore Glass-Steagall’s restrictions on how commercial banks may invest their deposits.

The 21st Century Glass-Steagall Act (pdf) would “clarify regulatory interpretations of banking law provisions that undermined the protections under the original Glass-Steagall” and would make “too-big-to-fail” institutions smaller and safer, minimizing the likelihood of a government bailout, according to ThinkAdvisor.

The bill, McCain said in a statement, wouldn’t end the concept of banks being too big to fail, but “would rebuild the wall between commercial and investment banking that was in place for over 60 years, restore confidence in the system and reduce risk for the American taxpayer.”

The bill would separate commercial banks, which manage checking and savings accounts for consumers, and investment banks.

“Despite the progress we’ve made since 2008, the biggest banks continue to threaten our economy,” Warren said in a statement. “The biggest banks are collectively much larger than they were before the crisis, and they continue to engage in dangerous practices that could once again crash our economy.”

A poll by Lake Research Partners found that Americans, by a margin of nearly 3 to 1, want more oversight of financial institutions, according to ThinkAdvisor. Whether the 21st Century Glass-Steagall Act becomes law, however, depends on whether members of Congress listen to voters or to their sponsors in the financial industry.

-Steve Straehley

To Learn More:

Sen. Warren Reintroduces Bill to Restore Glass-Steagall (by Melanie Waddell, ThinkAdvisor)

Warren, McCain Introduce Bill to Bring Back Glass-Steagall (by Kevin Cirilli, The Hill)

30% Growth of 4 Biggest Banks is a Danger Sign, Warns Senator Warren (by Noel Brinkerhoff, AllGov)

10-Year Anniversary of the Bill That Led to the Current Economic Crisis (by Noel Brinkerhoff and David Wallechinsky, AllGov)