Breaking the Glass Ceiling

Well, you sort of knew it was coming in some form or another.  That form happened to be the Banking Integrity Act of 2009.  Think of it as "Glass-Steagall II."

For the unwashed, and among other things, the original act created the FDIC and separated the practice of "investment banking" and "commercial banking."  The concept was intended to avoid the conflicts of interest that purportedly arose when the same Wall Street shark was responsible for both the growth of your long-term savings and the sale of securities (underwritten by self-same shark's bank, most likely).  It's effect was, as might be imagined, debatable.

Bloomberg reports today that the concept is, once again, making the rounds and points us to a document on Thomas:

Banking Integrity Act of 2009 (Introduced in Senate)

S 2886 IS

111th CONGRESS

1st Session

S. 2886

To prohibit certain affiliations (between commercial banking and investment banking companies), and for other purposes.

IN THE SENATE OF THE UNITED STATES

December 16, 2009

Ms. CANTWELL (for herself, Mr. MCCAIN, and Mr. FEINGOLD) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

A BILL

To prohibit certain affiliations (between commercial banking and investment banking companies), and for other purposes.

      Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

      This Act may be cited as the `Banking Integrity Act of 2009'.

SEC. 2. RESTORING LIMITATIONS ON FINANCIAL INSTITUTION AFFILIATIONS.

      (a) Limitation on Affiliation- The Banking Act of 1933 (12 U.S.C. 221a et seq.) is amended by inserting before section 21 the following:

      `Sec. 20. Beginning 1 year after the date of enactment of the Banking Integrity Act of 2009 , no member bank may be affiliated, in any manner described in section 2(b), with any corporation, association, business trust, or other similar organization that is engaged principally in the issue, flotation, underwriting, public sale, or distribution at wholesale or retail or through syndicate participation stocks, bonds, debenture, notes, or other securities, except that nothing in this section shall apply to any such organization which shall have been placed in formal liquidation and which shall transact no business, except such as may be incidental to the liquidation of its affairs.'.

      (b) Limitation on Compensation- The Banking Act of 1933 (12 U.S.C. 221 et seq.) is amended by inserting after section 31 the following:

      `Sec. 32. Beginning 1 year after the date of enactment of the Banking Integrity Act of 2009, no officer, director, or employee of any corporation or unincorporated association, no partner or employee of any partnership, and no individual, primarily engaged in the issue, flotation, underwriting, public sale, or distribution, at wholesale or retail, or through syndicate participation, of stocks, bonds, or other similar securities, shall serve simultaneously as an officer, director, or employee of any member bank, except in limited classes of cases in which the Board of Governors of the Federal Reserve System may allow such service by general regulations when, in the judgment of the Board of Governors, it would not unduly influence the investment policies of such member bank or the advice given to customers by the member bank regarding investments.'.

SEC. 3. PROHIBITING DEPOSITORY INSTITUTIONS FROM ENGAGING IN INSURANCE-RELATED ACTIVITIES.

      (a) In General- Beginning 1 year after the date of enactment of this Act, and notwithstanding any other provision of law, in no case may a depository institution engage in the business of insurance or any insurance-related activity.

      (b) Definition- As used in this section, the term `business of insurance' means the writing of insurance or the reinsuring of risks by an insurer, including all acts necessary to such writing or reinsuring and the activities relating to the writing of insurance or the reinsuring of risks conducted by persons who act as, or are, officers, directors, agents, or employees of insurers or who are other persons authorized to act on behalf of such persons.

Welcome back to 1933.