Byron Dorgan's Financial Plan: Common Sense From The Senator Who Saw This Coming
He got it right last time.
Senator Byron Dorgan, Democrat of North Dakota, was one of eight senators who stood up to oppose the repeal of the Glass-Steagall act in 1999. That repeal, which was signed into law by President Clinton exactly 10 years ago today, broke down the barriers between commercial banking and investment banking, and led to the growth of behemoth financial firms that were able to take enormous risks with impunity, because they were "too big to fail."
"I think we will in 10 years' time look back and say we should not have done this," Dorgan said back then. The video of his speech has become something of a cult favorite for wonks -- ten years, a $700 billion bailout and a major financial crisis later.
Washington has an odd habit of listening to the people who consistently get such things wrong, and ignoring the ones who get them right.
So today, on this solemn anniversary, how about listening to this guy? What does he think we should do now?
"Three things," the senator told me in an interview. "One is to separate investment banks and FDIC-insured banks. Second, prohibit FDIC-insured banks from dealing in risky financial instruments on their own proprietary accounts... And third, abolish 'too big to fail.' If you're too big to fail, you're too big. Too big to fail is what I call no-fault capitalism."
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