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The Return of Glass-Steagall?

Scarecrow and I were having a conversation this weekend about the root of all evil — or, more precisely, what you would have to do systemically in order to start turning the ship around so that we weren’t always playing defense on the progressive end.  Scarecrow has an amazing mind for understanding systems, and he believes that the “too big to fail” institutions are a huge part of the problem.

So this is good news:

Ten years ago, Congress dismantled the decades-old Glass-Steagall Act, breaking down the firewalls between commercial banks and securities houses, and helping Wall Street firms grow into the too-big-to-fail institutions that exist now. There’s been a great deal of debate about the extent to which the death of Glass-Steagall contributed to the global economic collapse that plagued the past two years — not to mention the trillions of dollars in government bailout cash that were required to stabilize the nation’s banking system. But some House Democrats place the blame squarely on the repeal of Glass-Steagall, and today they introduced legislation to reinstate it.

“[The repeal] was a recipe for disaster because these banks were empowered to make large bets with depositors’ money and money they didn’t really have,” Rep. Maurice Hinchey (D-N.Y.), who sponsored the new bill, said in a statement.

When many of those bets, particularly in the housing sector, didn’t pan out, the whole deck of cards came crumbling down and U.S. taxpayers had to come to the rescue. The absence of the protections in the Glass-Steagall Act essentially turned these financial giants into quasi-government entities because they were only able to survive the recent collapse with government assistance.

Meanwhile, Comcast has announced its intention to become the new PhRMA, and is running — wait for it! — pro health-care reform ads.  Subtle. They further earn the administration’s love by scolding the Chamber of Commerce for their opposition to the health care bill with the highly original “You just can’t let the perfect be the enemy of the very good.”

Probably just a huge coincidence that Comcast is trying to merge with NBC into a new media behemoth:

The $30 billion deal between the nation’s largest cable system and a Hollywood juggernaut will create a media behemoth that will undergo strict scrutiny by federal regulators appointed by Obama, who voiced concern about increasing media consolidation on the campaign trail.

But the companies under scrutiny in the biggest media deal since the Time Warner-AOL merger are helmed by executives who have been long-time contributors of the Democratic party and have other ties to the administration.

I have a feeling Obama is going to find a way to overlook that campaign promise, too.  And everyone who isn’t on the receiving end of Comcast’s campaign cash will be the worse for it.

But if you take as a given that campaign finance reform will be a part of any progressive plan for systemic reform, what do you think are the other requisite changes that need to be made?

Jane Hamsher

Jane Hamsher

Jane is the founder of Her work has also appeared on the Huffington Post, Alternet and The American Prospect. She’s the author of the best selling book Killer Instinct and has produced such films Natural Born Killers and Permanent Midnight. She lives in Washington DC.
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