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Busting big banks

New proposals in Congress would rein in big banks' investment strategies

Roger Showley, U-T SAN DIEGO

Friday, July 19, 2013

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Kelly Cunningham, National University System
Answer: YES 

Although I would usually argue for more privatization, deregulation, and freer markets over greater regulation and intrusion by the federal government, the present U.S. banking industry does not operate in a truly free-market system. Reinstating the Glass-Steagall Act will not prevent financial instability as long as the central bank continues to enable fractional-reserve banking, essentially generating credit out of thin air. So long as the central bank exists, it makes sense to impose tighter controls on banks to minimize the damage the Federal Reserve's policies inflict. More controls will simply suppress bankings' capabilities of further amplifying the Fed's pumping.