NJ-11 Candidate: 'We Can’t Wait For Next Banking Meltdown'

If you’re a resident of New Jersey’s 11th Congressional District who’s tired of “being taken advantage of by Wall Street,” Mitchell Cobert has a suggestion: separate investment banking from commercial banking.

In a recent post on Medium.com, Cobert – a practicing securities attorney running to succeed retiring U.S. Rep. Rodney Frelinghuysen – pledged to “immediately reinstate the Glass-Steagall Act” if elected.

Read his full blog post here.

What’s the Glass-Stegall Act, and why would it help residents of New Jersey’s 11th District? According to Cobert:

“When people talk about Wall Street, they are really talking about two broad classes of activities. Commercial banking: You deposit money in a checking or savings account at your neighborhood branch and the bank uses those deposits to make loans to consumers or small businesses. Investment banking: the kind of banking activity more common on Wall Street, like helping large companies issue stocks or bonds in order to fund themselves, and trading securities in the hope of making a profit.”

Cobert continued:

“The stock market crash of 1929 was caused, many thought, because these two types of banking had become intertwined. The Glass-Steagall Banking Act of 1933 was enacted to bring back financial stability and confidence in banks and financial institutions. It prohibited commercial banks from engaging in investment banking activities and kept the commercial banking system safe for over 70 years. When the Glass-Steagall Act was repealed in 1999, following decades of lobbying by the financial services industry, the barrier between commercial and investment banking activities was eliminated.”

He added:

“Today we no longer see banks providing annual interest rates of 3% or 4% or more on CDs. We certainly do not receive anywhere near those rates on our savings accounts. Instead we are encouraged to invest our hard-earned savings into securities products or managed accounts which subject our savings to market risk. Those investments provide the banks with annuitized income whether or not we earn a profit.”

Here's Cobert’s proposed solution: restore financial competition by “separating investment banking from commercial banking.”

“We cannot wait until the next market meltdown to act,” Cobert insisted. “If I am elected to Congress, I will work to immediately reinstate the Glass-Steagall Act. It is a necessary first step to protect the integrity of our financial institutions and to restore competition in the marketplace.”

New Jersey’s 11th Congressional District includes towns in Morris, Pasaic, Essex and Sussex counties.

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Photo: cobertforcongress.com