Ten years after the collapse of Lehman Brothers and "too big to fail," the National Association of Federally-Insured Credit Unions is going on the offensive against big banks and calling for a modern-day Glass-Steagall Act.
In a new white paper, NAFCU calls on legislators to separate traditional banks—ones working primarily with savings and checking accounts—from riskier financial institutions such as hedge funds and investment banks.
The trade group’s action is notable because credit unions rarely tackle legislation or regulations that don't specifically apply to credit unions. In most credit union-versus-bank battles, CUs play defense, not offense. Enacted in 1933 as a response to the stock market crash, the Glass-Steagall Act separated commercial banking from investment banking for 66 years, until its demise at the hands of Bill Clinton through the Gramm-Leach-Bliley Act.
The rift between banks and credit unions is well-known, “but this year shows that schism that really started with the financial crisis continues to play itself out here,” said Ed Mills, public policy analyst at Raymond James.
Read more in American Banker.