In light of the financial crisis and ensuing severe recession, Western governments are in the process of sharply transforming the laws and regulations for banks and other financial institutions. Yet, recent scandals and problems at major banks have given new life to calls for major structural changes beyond Dodd-Frank, Basel III and other banking reforms, including a return to Glass-Steagall’s restrictions on activities at banking groups or breaking up the largest banks. Any such changes would have significant implications for economic growth and stability, given the central role of finance in lubricating the gears of the economy.
On December 4, the Economic Studies program at Brookings held a conference to review the social purposes of finance, the current structure of the financial industry, and various reform proposals. Federal Reserve Board Governor Daniel Tarullo delivered the keynote address, along with presentations by Brookings Senior Fellows Martin Baily and Donald Kohn.