FINANCE: Letting Banks Run with Bulls

Letting Banks Run with Bulls

Four years after the market crash of 1929, Congress passed the Glass-Steagall Act, barring banks from dealing in stocks and other securities. At the time economists believed losses from stock trading helped cause the widespread bank failures of the early 1930s. So it is surprising that Wisconsin Democrat William Proxmire, chairman of the Senate Banking Committee, is pushing to let banks deal in securities again despite the Oct. 19 market collapse and its stirring of memories of 1929.

Last week Federal Reserve Chairman Alan Greenspan added his considerable backing to the Proxmire proposal, which would permit commercial banks to establish separate...