Washington Senate urges Congress to restore Glass Steagall Act banking separations

The House Consumer Protection & Business Committee convened on March 19, 2025, to discuss significant financial legislation aimed at reinstating the separation of commercial and investment banking functions, a principle established by the Glass-Steagall Act of 1933. This act was originally enacted in response to the 1929 stock market crash and the subsequent failures of numerous banks during the Great Depression. It prohibited commercial banks from engaging in investment banking activities, thereby protecting consumer deposits from risky investments.

During the meeting, Senator Bob Posagawa presented a joint memorial requesting that the U.S. Congress reinstate the provisions of the Glass-Steagall Act, which were repealed by the Gramm-Leach-Bliley Act in 1999. He emphasized the importance of this separation in safeguarding depositors and preventing banks from overextending themselves through speculative investments. Posagawa noted that the repeal of these provisions contributed to the financial crisis of 2008, where banks became "too big to fail," leading to taxpayer bailouts.

The senator articulated that the joint memorial serves multiple purposes: it signals Washington State's position on the issue, organizes efforts to influence federal policy, and educates constituents about the implications of banking practices. He expressed concern over current legislative efforts that might allow state resources to be invested in the stock market, which he opposed, reiterating the need for a clear distinction between commercial banking and investment activities.

The committee welcomed Senator Hasegawa and discussed the historical context of the Glass-Steagall Act, highlighting its role in protecting consumers and maintaining financial stability. Posagawa concluded by urging the committee to support the memorial, advocating for a unified state voice against risky banking practices and promoting local investment through community banks.

The meeting underscored the ongoing debate about financial regulation and the balance between consumer protection and banking innovation, with the committee planning to further explore the implications of reinstating the Glass-Steagall provisions in future discussions.