Ms. KAPTUR. Mr. Speaker, this week marks the 82nd anniversary of Black Thursday, the start of the great stock market crash of 1929. On that day, rampant Wall Street speculation that had characterized the Roaring Twenties came to an abrupt end. Our country learned many valuable lessons about the banking system and took action to contain the severe risks of an unregulated banking system. This body passed the Banking Act of 1933, commonly called Glass-Steagall, named after the lead sponsors of the bill. Well, from the shape of our economy today, it appears the U.S. forgot important lessons of economic behavior.
The banking system we have today again is too risky, too concentrated, and with too much absentee ownership. As a result, our system of credit is seized up and also less competitive. This results in lower capital formation in our local communities, which translates into fewer jobs.
Our system also has become one that does not financially empower or reward the average depositor. Consumers know that their interests on certificates of deposit have fallen to all-time lows; yet we see banking fees increasing on all kinds of transactions. Yes, it almost seems like you have to pay the banks to take your money. Money center banks, meanwhile, are earning huge profits while tightly restricting loans and hindering our economic recovery.
The U.S. has far fewer banks and savings and loan institutions today than we did a decade and a half ago. In fact, the Federal Deposit Insurance Corporation's figures show our vast Nation has only 6,414 commercial banks today, half the number that existed in 1990. In addition, 856 banks are on the FDIC's watch list, a very high figure. Moreover, 60 percent of the savings institutions have disappeared over the same period of time.
We see enormous accumulation of banking assets and vast financial power moved to a handful of powerful institutions that are making enormous profits, indeed, the highest profits in our Nation in addition to the oil companies. Fifteen years ago, the assets of the six largest banks were approximately 17 percent of gross domestic product. Today, after the recent financial panic, estimates for assets of those same banks are over half of our gross domestic product. So six financial institutions control an enormous percentage, not just of our banking system but, indeed, our economy and, in turn, our Nation's future. This is too much power in too few hands. The American people are feeling it in the restriction of credit, the lack of jobs with sluggish growth, and the lack of competitive capital opportunities.
Over a decade ago, Congress' ultimate response to the stock market crash of 1929 was abolished. Yes, the law that had separated risky Wall Street speculations from prudent community banking--the Glass-Steagall Act--was obliterated by the conference committee on the Gramm-Leach-Bliley Act. That legislation became law and created an economic time bomb that started ticking and contributed in a major way to the economic explosion in September 2008.
Financial abandon replaced prudence. Wall Street and its supporters in Congress became obsessed with stripping away all the prudent banking rules that were once the cornerstone of what had been a stable financial system. That system formed capital, protected consumer accounts, paid them a decent return on their money, and created the greatest period of growth in American history. That system built confidence, dependability, and wealth across our economy.
Wall Street lobbyists were eager to walk back the hands of time, falsely claiming the Banking Act of 1933--that had formed the basis of stable credit for half a century--was quaint and outdated. But when Graham-Leach-Bliley was signed into law, the protections that had separated prudent banking from risks were swept into the dust bin and financial calamity followed.
The Glass-Steagall protections are not outdated. Wall Street opposed them in the 1930s just as much as they do today. In the 1930s, it was the Pecora Commission--and we need another one--that was an instrument of this Congress that was charged with investigating Wall Street abuses in the banking system following the Great Depression. Their work is often credited with creating the momentum for passage of the Glass-Steagall Banking Act of 1933. And Pecora himself wrote that ``bitterly hostile was Wall Street to the enactment of the regulatory legislation.'' What is different today is how tamely Congress and the executive branch reacted to Wall Street abuse. Following the 2008 economic collapse, there was not an immediate recognition that what was needed was restoration of that sound financial framework.
Mr. Speaker, I have a bill, H.R. 1489, the Return to Prudent Banking Act. I ask my colleagues to cosponsor this bipartisan legislation. America surely needs to restore a secure, dependable, and prudent banking system so we can get on with the job of job creation. END