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Competing Institutional Perspectives in the Life of Glass–Steagall

  • Philip A. Wallach (a1)
Abstract

A growing body of scholarship explores processes of gradual but transformative institutional change, classifying patterns of change into several categories. I argue that policymakers themselves actively contest the appropriate institutional frames for understanding changes as they seek to guide institutional change, and show that judicial determinations of statutory meaning are sensitive to judgments about which institutional perspective is most compelling. A process-tracing examination of institutional changes in the Glass–Steagall Act over the law's whole life span, from 1933 to 1999, provides a concrete example of how the dynamics of contestation can play out. Those who conceived of Glass–Steagall as the institutional embodiment of the separation between commercial and investment banking argued that expansion of commercial bank powers represented institutional drift. Alternatively, those who came to see Glass–Steagall as just one set of statutory imperatives to be handled within the larger institutional context of American banking law, including banking regulators, interpreted regulatory changes as constructive acts of conversion adapting to novel economic challenges. I document the slow process through which courts came to accept the second framing while noting how the fixity of statutory text nevertheless continued to limit available adaptations.

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PWallach@brookings.edu
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1. “Washington People: Playful Postmortem Ices Cake at Glass-Steagall Repeal Party,” American Banker, 8 November 1999, 3.

2. E.g., James Lardner, “A Brief History of the Glass-Steagall Act,” Demos Explainer, 10 November 2009, http://www.demos.org/publication/brief-history-Glass-Steagall-act; Robert Weissman, “Reflections on Glass-Steagall and Maniacal Deregulation,” Common Dreams, blog, 12 November 2009, http://www.commondreams.org/view/2009/11/12-8; Barry Ritholtz, “A Brief History Lesson: How We Ended Glass-Steagall,” The Big Picture, blog, 17 May 2012, http://www.ritholtz.com/blog/2012/05/how-we-ended-Glass-Steagall/; Suárez Sandra and Kolodny Robin, “Paving the Road to ‘Too Big to Fail’: Business Interests and the Politics of Financial Deregulation in the United States,” Politics and Society 39 (2011): 74102.

3. Johnson Simon and Kwak James, 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown (New York: Vintage Books, Kindle edition, 2011), locs. 704708 , 737–750, 2563–2580.

4. Pierson Paul, Politics in Time: History, Institutions, and Social Analysis (Princeton, NJ: Princeton University Press, 2004), 7985.

5. Streeck Wolfgang and Thelen Kathleen, “Introduction: Institutional Changes in Advanced Political Economies,” in Beyond Continuity, Streeck and Thelen eds. (New York: Oxford University Press, 2005): 1830 , 24.

6. Indeed, as Lomazoff notes, in later work Thelen has abandoned exhaustion as a separate fifth category. Lomazoff Eric, “Turning (Into) ‘The Great Regulating Wheel’: The Conversion of the Bank of the United States, 1791–1811,” Studies in American Development 26 (2012): 3 FN 14.

7. For example, Jacob Hacker diagnosed the “liberalization” of America's welfare institutions as a clear case of drift, in which welfare state opponents avoided frontal attacks upon venerable statutes and instead prevented needed updating. Hacker Jacob, “Privatizing Risk without Privatizing the Welfare State: The Hidden Politics of Social Policy Retrenchment in the United States,” American Political Science Review 98 (2004): 243260 . Depending on one's interpretation of the overall growth of America's commitment to and spending on welfare institutions over the last several decades, one might well argue that layering is the more appropriate metaphor.

8. This article is not the first to notice the history of Glass–Steagall described here. In particular, for an excellent descriptive account through 1990 that provided a helpful starting point for the current inquiry, see Kaufman George G. and Mote Larry R., “Glass Steagall: Repeal by Regulatory and Judicial Reinterpretation,” Banking Law Journal 107 (1990): 388421.

9. See, e.g., Derthick Martha, Policymaking for Social Security (Washington, DC: Brookings Institution Press, 1979); Melnick R. Shep, Regulation and the Courts: The Case of the Clean Air Act (Washington, DC: Brookings Institution Press, 1983); Melnick R. Shep, Between the Lines: Interpreting Welfare Rights (Washington, DC: Brookings Institution Press, 1994).

10. See, e.g., Strauss Peter L., “When the Judge is Not the Primary Official with Responsibility to Read: Agency Interpretation and the Problem of Legislative History,” Chicago-Kent Law Review 66 (1990): 321354 ; Mashaw Jerry, “Norms, Practices, and the Paradox of Deference: A Preliminary Inquiry into Statutory Interpretation,” Administrative Law Review 57 (2005): 501552.

11. Of course, aiming for maximally restrictive clarity is different from achieving it. Drafting legislative text is a difficult craft requiring great foresight, and sometimes clear text may inadvertently create loopholes that can be exploited by creative lawyers seeking to undermine the law's underlying purpose. A law's framers may also quite consciously introduce loopholes creating a narrow exemption to a general scheme in the hopes of advancing an important policy interest without jeopardizing the overall effectiveness of the statute. These intentional loopholes can be thought of as counterparts of the “red tape” analyzed in Kaufman Herbert, Red Tape: Its Origins, Uses, and Abuses (Washington, DC: Brookings Institution, 1977). Kaufman characterized red tape as minor regulations enacted to ensure various forms of fairness in bureaucratic action, each independently enacted with good intentions but without consideration for their cumulative effects. Just as red tape is rarely meant to be burdensome, few intentional loopholes are designed to undermine the overall functioning of the statute in question, but it is perhaps an iron law of regulation that more private actors will take advantage of loopholes than their creators anticipated.

12. Chevron, U.S.A. v. Natural Resources Defense Council, 467 U.S. 837 (1984).

13. Menken's definition: Democracy is the theory that the common people know what they want, and deserve to get it good and hard.” Mencken H. L., A Little Book in C Major (New York: John Lane Co., 1916), 19.

14. For a full exploration of this insight, see Wallach Philip A., “When Can You Teach an Old Law New Tricks?NYU Journal of Legislation and Public Policy 16 (2013): 689755.

15. For an analysis of contemporary debates about Glass–Steagall, see Philip A. Wallach, “Moving Beyond Calls for a ‘New Glass-Steagall’,” Brookings Issues in Governance Studies 51, September 2012, http://www.brookings.edu/research/papers/2012/09/13-Glass-Steagall-wallach.

16. See Schroedel Jean Reith, Congress, the President, and Policymaking: A Historical Analysis (Armonk, NY: M.E. Sharpe, 1994), ch. 3; Kennedy Susan Estabrook, The Banking Crisis of 1933 (Lexington, KY: University Press of Kentucky, 1973).

17. Commercial banks accept deposits and make loans, whereas investment banks underwrite and market securities as well as executing various trades. Unmodified, the term “bank” generally refers to a commercial bank.

18. Bentson George, The Separation of Commercial and Investment Banking: The Glass-Steagall Act Revisited and Reconsidered (London: MacMillan Press, 1990), 1112.

19. In adding to Streeck and Thelen's discussion of conversion, Lomazoff adopts roughly this approach, offering a penetrating glimpse into the thinking of officials at the Bank of the United States as they sought to turn that institution to new purposes. Adopting an internal perspective is perhaps the most direct route to acquiring what Carpenter calls “dense knowledge,” which requires an empirical account to “make sense to those most thoroughly and intimately aware of the action.” Carpenter Daniel, Reputation and Power: Organizational Image and Pharmaceutical Regulation at the FDA (Princeton, NJ: Princeton University Press, 2010), 29.

20. Note that, for almost all of the law's history, the most prominent of these defenders came from the securities industry, but that now in the post–Glass–Steagall era the loudest voices are those who yearn for a simpler financial industry, such as Sen. Elizabeth Warren (D-MA). See Robert Rizzuto, “Elizabeth Warren renews call for Glass-Steagall Act following JPMorgan's announcement that risky trading loss grew to $5.8 billion,” The Republican, 13 July 2012, http://www.masslive.com/politics/index.ssf/2012/07/elizabeth_warren_renews_call_f.html.

21. Editors' introduction to Daniel Carpenter and Moss David A., eds., Preventing Regulatory Capture: Special Interest Influence and How to Limit It (New York: Cambridge University Press, 2014), 1618.

22. Bentson, ch. 11.

23. For classic statements, see Stigler George, “The Theory of Economic Regulation,” Bell Journal of Economics and Management Science 2 (1971): 321 ; Peltzman Sam, “Toward a More General Theory of Regulation,” Journal of Law & Economics 19 (1976): 211240.

24. Macey Jonathan, “Special Interest Groups Legislation and the Judicial Function: The Dilemma of Glass-Steagall,” Emory Law Journal 33 (1984): 140.

25. Ibid., 3.

26. A note on the various banking regulators involved: banking has been subject to federal regulation longer than any other part of the economy, and over time it has acquired a multitude of separate regulators, each of which has its own distinct “personality” in addition to having different responsibilities. This means that each pursued its own unique agenda as it enforced Glass–Steagall. The Office of the Comptroller of the Currency (OCC) is responsible for chartering and regulating national banks and has tended to craft regulatory solutions in order to satisfy its “customers”— and since bankers seeking a new charter are faced with a choice of either national or state regulation, seeing the regulated interests as customers or clients is somewhat more apt for banking than other areas of regulation. This culture tends to overwhelm any effects of partisanship, and comptrollers of both parties tend to be highly sympathetic to commercial banking interests. The Federal Deposit Insurance Corporation (FDIC) is built and acts like an insurance company but is also charged with regulating state banks that choose not to be members of the Federal Reserve System. When its insurance function was not directly implicated, it tended to follow the lead of the other regulators on Glass–Steagall issues. The Federal Reserve Board of Governors (Fed) is responsible for ensuring the safety and soundness of its member banks, and the Bank Holding Company Act of 1956 (discussed below) also vested it with regulatory responsibility for bank holding companies. The Fed functions much like an academic institution, and generally acts as a repository of prevailing technocratic impulses regarding banking. See Khademian Anne, Checking on Banks: Autonomy and Accountability in Three Federal Agencies (Washington, DC: Brookings Institution Press, 1996).

27. Board of Governors v. Agnew, 329 U.S. 441 (1946).

28. Ibid., 444.

29. Ibid., 446.

30. Ibid., 447.

31. A bank holding company is defined as any company exercising control over a bank. The form offers various advantages for raising capital through issuing stock or debt. The Glass–Steagall Act put BHCs under weak Federal Reserve supervision, and never covered BHCs with only one bank; Jessee Michael A. and Seelig Steven A., Bank Holding Companies and the Public Interest (Lexington, MA: Lexington Books, 1977), 8. Figure 1, displayed on the following page, clarifies the rather confusing relationship between BHCs, banks, bank subsidiaries, and bank holding company affiliates. It should be noted that putting a bank under the auspices of a BHC would not relieve it from supervision by its normal regulator, but by creating an organization outside of that regulator's jurisdiction, those people effectively exercising supervisory control might nevertheless evade the effects of some regulations.

32. Jessee and Seelig, Bank Holding Companies, 9 FN b.

33. Worsham Jeffrey, Other People's Money: Policy Change, Congress, and Bank Regulation (Boulder, CO: Westview Press, 1996), 9099.

34. Worsham argues that the net effect of the BHC Act of 1956 was to facilitate drift. His interpretation is that the New Deal coalition that had passed Glass–Steagall in 1933 was no longer energized to protect its own regulatory regime for banking and, therefore, was not prepared to expend political capital to defend the act from encroachment. I find his argument misleading in two ways. First, to decide if the BHC Act itself facilitated drift or worked against it, we need to use the status quo as our point of comparison rather than a hypothetical law that would have perfectly locked a particular result into place. Second, it is doubtful that Congress included the exemptions to undermine the whole system, and indeed, they closed these loopholes in the following decade once they became understood as serious threats.

35. Congressional Quarterly Almanac 12 (1956): 557.

36. For a similar dynamic, see Patashnik Eric, Reforms at Risk: What Happens After Major Policy Changes are Enacted (Princeton, NJ: Princeton University Press, 2008), 71.

37. Jessee and Seelig, Bank Holding Companies, 12.

38. 12 U.S.C. § 1843 (c)(8), also referred to as §4(c)(8) of the Bank Holding Company Act of 1956.

39. Office of the Comptroller of the Currency, “Digest of Opinions of the Comptroller of the Currency ¶ 220A” (August 1957), reprinted in Federal Banking Law Reporter (CCH) ¶ 96,262 at 81,357, cited in American Bankers Association v. SEC, 804 F. 2d 739 (1986), 741.

40. Baker, Watts & Co. v. Saxon, 261 F. Supp. 247 (D.D.C. 1966).

41. Congressional Quarterly Almanac 21 (1965): 856–57.

42. Congressional Quarterly Almanac 22 (1966): 762–66.

43. For a list of other loopholes being used, see Congressional Quarterly Almanac 25 (1969): 941–42. The desire to escape regulation leads to some fairly ingenious means of evasive action, some of which seem obvious in retrospect but many of which simply seem impossible to anticipate. An obvious one was the minimum of 25 percent ownership of a securities firm that triggered regulation. BHCs simply found ways to exert controlling interests with 24 percent of shares. This loophole was closed by the 1970 amendments by simply allowing the Fed to determine when a controlling interest was present, showing the need for flexibility to achieve policy results robust to private attempts at evasion; see Congressional Quarterly Almanac 26 (1970): 874.

44. Congressional Quarterly Almanac 25 (1969): 942.

45. Congressional Quarterly Almanac 26 (1970): 880.

46. Jessee and Seelig, Bank Holding Companies, 30–37.

47. For the classic treatment of blame shifting, see Fiorina Morris, Congress: Keystone of the Washington Establishment (New Haven, CT: Yale University Press, 1989) (2nd ed.).

48. Association of Data Processing Service Organizations v. Camp, 397 U.S. 150 (1970), 156–57. The case centered on powers granted to national banks by the OCC under the National Bank Act rather than directly implicating Glass–Steagall or the BHC Act, but the principle of its holding was easily applied to these closely related laws.

49. Investment Company Institute v. Camp, 401 U.S. 617 (1971).

50. Ibid., 625–27.

51. Ibid., 628, 631–33.

52. Ibid., 634–36.

53. Ibid., 642–43.

54. See Macey, 10–15.

55. Cited in Board of Governors v. ICI, 450 U.S. 46 (1981), 48–49.

56. Jessee and Seelig , Bank Holding Companies, 34, 39.

57. Letter from Comptroller James E. Smith to G. Duane Vieth (June 10, 1974), reprinted in Federal Banking Law Reporter (CCH) ¶ 96,272, cited in American Bankers Association v. SEC, 804 F. 2d 739 (1986), 741.

58. Gilbert R. Alton, “Requiem for Regulation Q: What It Did and Why It Passed Away,” Federal Reserve Bank of St. Louis Review (February 1986): 2237.

59. Chernow Ron, The Death of the Banker: The Decline and Fall of the Great Financial Dynasties and the Triumph of the Small Investor (New York: Vintage Books, 1997).

60. Isaac William M. and Fein Melanie L., “Facing the Future—Life Without Glass-Steagall,” Catholic University Law Review 37 (1988): 281322, 285.

61. For an analysis of the movement for deregulation, see Derthick Martha and Quirk Paul, The Politics of Deregulation (Washington, DC: Brookings Institution Press, 1985).

62. “Adoption of Policy Statement on Bank Holding Companies,” 73 Federal Reserve Bulletin 441 (June 1987).

63. Office of the Comptroller of the Currency, Strength = New Powers + Firm Supervision,” Quarterly Journal 4:1 (1985): 3537.

64. For a comprehensive account of the rise of derivatives, with special attention paid to J.P. Morgan, see Tett Gillian, Fool's Gold (New York: Free Press, 2009) (Kindle edition), especially locs. 305309 , 331–332, and 484–89.

65. Office of the Comptroller of the Currency, Looking Ahead to 1983,” Quarterly Journal 2:1 (1983): 3942.

66. Office of the Comptroller of the Currency, Decision of the Comptroller of the Currency on the Application by Security Pacific National Bank to Establish an Operating Subsidiary to Be Known as Security Pacific Discount Brokerage Services, Inc.,” Quarterly Journal 1:4 (1982): 4044 ; Interpretive Letter #366,” Quarterly Journal 5:4 (1986): 2021.

67. Federal Reserve Board of Governors, “Order Approving Application to Underwrite and Deal in Government Securities and Money Market Instruments and to Offer Investment Advisory Services,” 70 Fed. Res. Bull. 661 (August 1984); “Order Approving Application to Engage in Combined Investment Advisory and Securities Execution Services,” 72 Fed. Res. Bull. 584 (Aug. 1986); “Order Conditionally Approving Application to Underwrite and Deal in Certain Securities to a Limited Extent,” 73 Fed. Res. Bull. 607 (July 1987).

68. Federal Reserve Board of Governors, “Order Approving Applications to Engage in Limited Underwriting and Dealing in Certain Securities,” 73 Fed. Res. Bull. 473 (June 1987).

69. James Kwak, “Cultural Capture and the Financial Crisis,” in Carpenter and Moss, eds., (2014), 71–98.

70. Erik Filipiak, “The Evolution of Bank Regulation: The Interplay of Regulators and the Regulated” (Ph.D. dissertation, Department of Government, Cornell University): 108–111. Filipiak's work is an especially valuable guide for those attempting to think about the systematic challenges facing banking regulators as they sought to harmonize their varied responsibilities.

71. Congressional Quarterly Almanac 55 (1999): 5–26–5–27.

72. “Order Approving Applications to Engage in Limited Underwriting,” 506.

73. E.g., “Statement by Michael Bradfield, General Counsel, Board of Governors of the Federal Reserve System, before the Subcommittee on Commerce, Consumer, and Monetary Affairs of the Committee on Government Operations, U.S. House of Representatives, July 21, 1983,” 69 Fed. Res. Bull. 609 (July 1983); “Statement by Paul A. Volcker, Chairman, Board of Governors of the Federal Reserve System, before the Committee on Banking, Finance, and Urban Affairs, U.S. House of Representatives, June 12, 1984,” 70 Fed. Res. Bull. 560 (June 1984); “Statement by Paul A. Volcker, Chairman, Board of Governors of the Federal Reserve System, before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate,” 73 Fed. Res. Bull. 199 (January 1987); “Statement by Alan Greenspan, Chairman, Board of Governors of the Federal Reserve System, before the Subcommittee on Telecommunications and Finance of the Committee on Energy and Commerce, U.S. House of Representatives, October 5, 1987,” 73 Fed. Res. Bull. 907 (October 1987). Importantly, many policymakers viewed maintaining the separation between banking and commerce as far more important than the separation between commercial banks and investment banks. Rep. Jim Leach cites protection of this separation between banking and commerce as one of the primary motivators for reformers in the 1990s; James A. Leach, interview with author, Princeton, NJ, November 2008.

74. Such institutional patchwork recalls the “state building as patchwork” described in another context by Skowronek Stephen, Building a New American State: The Expansion of National Administrative Capacities, 1877–1920 (New York: Cambridge University Press, 1982). Just as building America's administrative state as a whole proceeded through an incremental reconstruction of existing institutions, so too is the same messy, incremental, and layered process played out in the context of reconstituting statutory institutions capable of pursuing particular policy goals.

75. Board of Governors v. ICI, 450 U.S. 46 (1981), 68.

76. A.G. Becker Inc. v. Board of Governors, 693 F.2d 136 (D.C. Cir., 1982).

77. Ibid., 139.

78. Ibid., 140–41.

79. Ibid., 149.

80. Ibid., 152.

81. Chevron, U.S.A. v. Natural Resources Defense Council, 467 U.S. 837 (1984).

82. Ibid., 842–43.

83. First Bancorp. v. Board of Governors, 728 F.2d 434 (10th Cir., 1984).

84. Ibid., 436.

85. Dimension Financial Corporation v. Board of Governors, 744 F.2d 1402 (10th Cir., 1984). For a clearer exposition of the same facts, see Board of Governors v. Dimension Financial Corporation, 474 U.S. 361 (1986), 367.

86. Dimension Financial Corporation v. Board of Governors, 1405.

87. Ibid., 1407–1408.

88. Board of Governors v. Dimension Financial Corporation, 474 U.S. 361 (1986).

89. Ibid., 368.

90. Ibid., 373.

91. Ibid., 374.

92. SIA v. Board of Governors, 468 U.S. 137 (1984). The case is often referred to as Becker in other court cases and in the literature, and I adopt this usage in this article. Alternatively, this line of cases is sometimes called Banker's Trust, after the name of the bank seeking to market commercial paper (whereas Becker and the SIA represented the securities firms whose competitive interests were damaged by the Fed's permissive decision).

93. Ibid., 140–41.

94. Ibid., 141–42.

95. Ibid., 153.

96. ICI v. Conover, 593 F.Supp 846 (N.D.Cal., 1984), 854.

97. ICI v. Conover, 596 F.Supp 1496 (D.D.C., 1984); ICI v. Clarke, 630 F.Supp 593 (D.Conn., 1986). In 1985, Robert L. Clarke replaced C. T. Conover as Comptroller of the Currency; each man is named as the relevant party in some of these closely related cases.

98. ICI v. Clarke, 789 F.2d 175 (2nd Cir., 1986); ICI v. Conover, 790 F.2d 925 (D.C. Cir., 1986).

99. ICI v. Conover, 933–35.

100. Ibid., 938.

101. ICI v. Clarke, 793 F.2d 220 (9th Cir., 1986), 222.

102. Denial of Cert, 479 U.S. 939 (1986).

103. SIA v. Board of Governors, 807 F.2d 1052 (D.C. Cir., 1986).

104. Ibid., 1055.

105. Ibid., 1067.

106. Denial of Cert., 483 U.S. 1005 (1987).

107. American Bankers Association v. SEC, Civil Action No. 85-02482, slip op. (D.D.C.).

108. American Bankers Association v. SEC, 804 F.2d 739 (D.C. Cir., 1986), 741–43.

109. Ibid., 749.

110. Ibid., 754.

111. ICI v. FDIC, 815 F.2d 1540 (D.C. Cir., 1987), 1546.

112. Congressional Quarterly Almanac 43 (1987): 632; Congressional Quarterly Almanac 44 (1988): 231–32.

113. Congressional Quarterly Almanac 44 (1988): 236, 241.

114. Ibid., 241.

115. Congressional Quarterly Almanac 45 (1989): 122.

116. Federal Reserve Board of Governors, “Regulation Y: Amendment,” 75 Fed. Res. Bull. 751 (November 1989).

117. General Accounting Office, GAO/GGD-90-48, “Bank Powers: Activities of Securities Subsidiaries of Bank Holding Companies” (1990); GAO/GGD-91-131, “Bank Powers: Bank Holding Company Securities Subsidiaries' Market Activities Update” (1991).

118. General Accounting Office, GAO/T-GGD-95-12, “Modernization of the Financial Services Regulatory System. Statement of James L. Bothwell, before the Committee on Banking and Financial Services, House of Representatives” (1995).

119. This reversal of the securities industry's position nicely illustrates the opportunistic orientation of interest groups toward institutional change. This dynamic closely parallels what Hammond and Knott (1988) call the “deregulatory snowball.” They argue that when the status quo of regulation is sufficiently disrupted, those who found themselves as beneficiaries of regulation in the past may now find themselves receiving the short end of the stick and call for the abandonment of regulation altogether.

120. Congressional Quarterly Almanac 47 (1991): 76.

121. Ibid., 84.

122. Ibid., 89, 91.

123. Leach's efforts to clean up banking policy make him an exemplar of what we might call a “policy superintendent.” Scholars of American political development have recently developed a rich scholarship surrounding “policy entrepreneurship.” See, e.g., Carpenter (2001), 14–36; Sheingate Adam D., “Political Entrepreneurship, Institutional Change, and American Political Development,” Studies in American Political Development 17 (2003): 185203 . Where an entrepreneur conceptualizes and realizes new possibilities for action, the superintendent recognizes existing structures in need of attention and marshals the resources necessary to restore coherence. While less glamorous than entrepreneurship, superintendence can nevertheless bring political rewards, especially from those interests suffering as a result of statutory neglect.

124. Congressional Quarterly Almanac 51 (1995): 280.

125. Ibid., 2–84.

126. Nationsbank v. VALIC, 513 U.S. 251 (1995); Barnett Bank v. Nelson, 517 U.S. 25 (1996).

127. Congressional Quarterly Almanac 52 (1996): 2–442–54 ; Bill McConnell, “Leach to Seek Broadening of Powers for Bank Units,” American Banker, 20 December 1996, 1. A regulatory relief bill passed that year did contain a minor Glass–Steagall provision. Well-capitalized BHCs seeking to expand into non-banking activities approved by the Federal Reserve had previously needed to apply and wait up to 90 days for Fed Board approval, but could now proceed just by notifying the Fed within 10 days of commencing the new activity; see Congressional Quarterly Almanac 52 (1996): 249 . Congress was fully cognizant of the dynamic at work and here streamlined regulatory change even as it failed to provide more sweeping reform. Apparently, the interest group dynamics that made it too politically costly to achieve wholesale change did not prevent some modest harmonization of law and practice.

128. Congressional Quarterly Almanac 52 (1996): 254.

129. Congressional Quarterly Almanac 53 (1997): 274 . For further exploration of the political reorientation of the securities and insurance industries and its impact on the legislative process, see Suárez and Kolodny (2011).

130. Leach, interview with author.

131. Congressional Quarterly Almanac 53 (1997): 275.

132. Congressional Quarterly Almanac 54 (1998): 5–55–8.

133. Congressional Quarterly Almanac 55 (1999): 523 .

134. Congressional Quarterly Almanac 54 (1998): 5–95–11 .

135. Ibid., 5–10 – 5–12. It should be noted that Gramm's intense opposition to the CRA appeared to be ideological rather than interest-group-driven. At this point in time, the ABA's representative said that banks did not feel particularly strongly on the issue of the CRA; see Congressional Quarterly Almanac 55 (1999): 510 .

136. Congressional Quarterly Almanac 54 (1998): 514 .

137. Congressional Quarterly Almanac 55 (1999): 5–55–15 .

138. Ibid., 5–25

139. Ibid., 5–26, 5–31.

140. “Washington People: Playful Postmortem Ices Cake at Glass-Steagall Repeal Party,” American Banker, 8 November 1999, 3.

141. Leach, interview with author.

142. E.g., for its guilt: House Majority leader Steny Hoyer, interviewed in James Rowley and Christine Harper, “House Discussing Glass-Steagall Revival, Hoyer Says,” Bloomberg, 15 December 2009, http://www.bloomberg.com/apps/news?pid=newsarchive&sid=arMrSVjq4cts); Ritholtz Barry, with Task Aaron, Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy (Hoboken, NJ: John Wiley & Sons), 135–37, 212–14, 238. And against Glass–Steagall's guilt: former President Bill Clinton, see Maria Bartiromo, “Bill Clinton on the Banking Crisis, McCain, and Hillary,” Business Week, 24 September 2008, http://www.businessweek.com/stories/2008-09-23/bill-clinton-on-the-banking-crisis-mccain-and-hillary; and Tyler Cowen, “Did the Gramm-Leach-Bliley Act cause the housing bubble?” Marginal Revolution, blog, 19 September 2008, http://marginalrevolution.com/marginalrevolution/2008/09/did-the-gramm-l.html.

143. Philip A. Wallach, “Moving Beyond Calls for a ‘New Glass-Steagall’.”

144. James Rickards, “Repeal of Glass-Steagall Caused the Financial Crisis,” U.S. News Economic Intelligence, blog, 12 August 2012, http://www.usnews.com/opinion/blogs/economic-intelligence/2012/08/27/repeal-of-Glass-Steagall-caused-the-financial-crisis.

145. See also Paul Krugman, “The Gramm connection,” The Conscience of a Liberal (New York Times blog), 29 March 2008, http://krugman.blogs.nytimes.com/2008/03/29/the-gramm-connection/?_r=0.

146. Fisher Keith R., “Orphan of Invention: Why the Gramm-Leach-Bliley Act was Unnecessary,” Oregon Law Review 80 (2001): 13011421.

147. Barry Ritholtz, “A Brief History Lesson: How We Ended Glass Steagall.”

148. See Suárez and Kolodny, 93.

149. Group of Thirty, “The Structure of Financial Supervision: Approaches and Challenges in a Global Marketplace,” October 2008, http://www.group30.org/images/PDF/The%20Structure%20of%20Financial%20Supervision.pdf: 32–33.

150. Statutory text thus creates a classic case of path dependence; see Pierson Paul, “Increasing Returns, Path Dependence, and the Study of Politics,” American Political Science Review 94 (2000): 251267.

151. This logic closely tracks the arguments made in the constitutional realm by Whittington Keith E., Constitutional Interpretation (Lawrence, KS: University Press of Kansas).

152. For a discussion of the interpretive challenges posed by long-lived and dynamic statutes, see Strauss Peter L., “Statutes That Are Not Static—The Case of the APA,” Journal of Contemporary Legal Issues 14 (2005): 767802.

I am grateful to many people for their comments on previous versions of this article: Doug Arnold, Chuck Cameron, Nick Carnes, Erik Filipiak, Paul Frymer, John Kastellec, Vera Krimnus, Dave Lewis, Herschel Nachlis, Kim Scheppele, Keith Whittington, Emily Zackin, and Julian Zelizer, as well as the editors of this journal and two very helpful anonymous reviewers. I am also indebted to Rep. Jim Leach, whose perspective was invaluable in navigating the case study. Errors and omissions are, of course, my own.

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