By Louis Navellier of Investor Place
In 1999, Congress repealed a piece of Depression-era legislation commonly referred to as the Glass-Steagall Act. It was intended to reduce risk at banks by limiting investment activities. In the wake of the financial crisis, this move has taken a lot of heat -- and not without reason.
After all, the repeal of Glass-Steagall enabled commercial lenders like Citigroup (C) to dip into the kinky investment acronyms we have come to despise -- CDOs, SIVs and other items that resulted in huge losses at Citi and others.
President Obama's proposal would prevent commercial banks from ever taking such bets again and putting depositors and the credit market at risk. The president has also proposed limits on financial mergers, in an effort to prevent the bailout of another bank that is "too big to fail."
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