Courtesy of Pam Martens
President Franklin Delano Roosevelt Signing the Glass-Steagall Act on June 16, 1933
Seven banking and credit union associations have sent a letter to the Office of the Comptroller of the Currency (OCC), the regulator of national banks in the U.S., spelling out the dangers of the OCC approving a pending bank charter that would allow a national bank to accept and hold deposits that lack federal deposit insurance. The lack of federal deposit insurance triggered the bank runs and banks collapses that played a key role in ushering in the Great Depression. (More on that in a moment.)
The bank making the proposal for uninsured banking is Figure Bank, N.A., part of the blockchain startup, Figure Technologies. The organizations wisely arguing against it are the American Bankers Association, Bank Policy Institute, Credit Union National Association, Independent Community Bankers of America, National Association of Federally Insured Credit Unions, The Clearing House, and Consumer Bankers Association.
The organizations make the following points in their letter to the OCC:
“…the precedent-shattering approach of granting a national bank charter to an institution that accepts only uninsured deposits would violate the Federal law, the consistently expressed intent of Congress, and public policy considerations essential to the functioning of the nation’s financial system….”
“…the public information released by the OCC includes only a skeletal description of Applicant’s proposed activities and does not provide the public with a sufficient factual basis to comment on the application.”
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