PHOTO/DENNIS MYERS Sen. Dean Heller just before a 2012 debate with Rep. Shelley Berkley.

On Nov. 4, 1999, the U.S. Senate voted on the conference version of the Financial Services Modernization Act, also called the Gramm-Leach-Bliley Act. This “modernization” restored some conditions that had existed in the financial community in the 1920s.

Specifically, it dismantled the second Glass-Steagall Act of 1933, which prohibited banks from risking money in insurance and investment businesses. It also repealed portions of the Bank Holding Company Act of 1956, which had prohibited a bank holding company from owning non-financial corporations. This was done at the urging of Democratic President Bill Clinton and some economists.

Six months earlier, U.S. Sen. Harry Reid had voted against this deregulatory measure, as did his colleague, U.S. Sen. Richard Bryan, also a Nevada Democrat. But this time, Reid joined the majority and voted to repeal Glass-Steagall. Only seven out of 40 Democrats voted against the bill. One out of 45 Republicans voted against it. It was one of those votes that gave the Democratic Party its growing reputation as a corporate party.

In the House, Nevada’s Shelley Berkley voted to repeal Glass-Steagall. So did Republican Jim Gibbons. That left Bryan as the only Nevada congressmember to vote against repeal.

During the Wall Street meltdown in 2008, many in and out of Congress— including Reid and numerous economists—blamed the disaster on the Glass-Steagall repeal.

When Berkley faced appointed Republican Sen. Dean Heller in the 2012 election, he used her vote to repeal Glass-Steagall against her.

“I want to move to going back to Glass-Steagall,” Heller told the editorial board of the Las Vegas Review-Journal in October 2012. Based on that assurance, the right-wing Review-Journal editorial page backed him with an editorial that read in part, “Rep. Berkley also voted in 1999 to repeal the Glass-Steagall Act, which kept consumer banks from risking depositor capital in high-risk ventures. (She now admits that vote, which played a major role in creating the Great Recession, was “a mistake,” though she still rakes in contributions from grateful Wall Street financiers.) Sen. Heller? He’d restore Glass-Steagall to save the community and small commercial banks that have traditionally funded American small business.”

But since being sworn into office for an elected term of his own, Heller has done nothing to reinstitute Glass-Steagall, either by introducing his own measure or by joining legislation sponsored by someone else, as Sen. John McCain did by cosponsoring Sen. Elizabeth Warren’s proposed “21st Century Glass-Steagall Act.”

When Heller talks about Glass-Steagall at all, he tends to cite the Volcker Rule, a component of the Wall Street Reform and Consumer Protection Act, often called Dodd-Frank, that Congress passed in 2010 as a substitute for reviving Glass-Steagall. The Volcker rule—section 619 of the act—prevents banks from some speculative investments that do not benefit depositors. After Heller was appointed to the Senate Banking Committee, he kept hands-off the Glass-Steagall issue.

But numerous officials and analysts on both the left and right consider Dodd-Frank inferior to Glass-Steagall. Heller is one of them. In fact, he voted against Dodd-Frank. In October 2012, Review-Journal columnist Steve Sebelius wrote, “Heller and many of his fellow Republicans scoff at Dodd-Frank’s ability to effectively regulate the industry.”

In 2012, Pulitzer financial reporter Jesse Eisinger wrote in the New York Times, “Last week, it finally became clear that the Volcker rule was as good as dead. … [B]ank lobbyists with complicit regulators and legislators took a simple concept and bloated it into a 530-page monstrosity of hopeless complexity and vagueness.” Around the same time, the Economist reported, “In November four of the five federal agencies charged with enacting this [Volcker] rule jointly put forward a 298-page [implementing regulation] which is, in the words of a banker publicly supportive of Dodd-Frank, ’unintelligible any way you read it.’ It includes 383 explicit questions for firms which, if read closely, break down into 1,420 subquestions, according to Davis Polk, a law firm.”

When Heller joined the Banking Committee in 2013, Sebelius—who has dogged Heller’s steps on Glass-Steagall closer than any other reporter—wrote, “So is Heller moving forward with his previous commitment to re-institute Glass-Steagall? It’s a question I’ve repeatedly asked his office over the past two months. But, while Heller’s staff has promptly replied to other requests for information, they’ve simply ignored emails and calls on the Glass-Steagall issue.”

Heller’s office reacted the same way when we asked.

In July this year, Sebelius obtained a letter Heller wrote to a Nevadan who had inquired about Glass-Steagall. In it, Heller wrote that “responsible policies do not leave taxpayers exposed to permanent bailouts.” But there was no commitment to revive Glass -Steagall, and when Sebelius asked if Heller supported the Warren-McCain measure, Heller’s office issued this statement: “Senator Heller’s position has stayed the same—it was a mistake to repeal Glass-Steagall and to bailout [sic] Wall Street banks. Over half a decade has passed since the great recession began, and financial regulators still have not finished all of their new rules and only recently enacted the Volcker rule to limit trading practices by banks. We do not know what the effects of all these new regulations will have, for better or worse, on Nevadans and our economy. Senator Heller will continue to fight for realistic reforms to address Washington’s culture of ’too big to fail’.”

That didn’t answer the question of whether Heller supported the Warren-McCain bill.

During the campaign, Heller actually raised more money from the financial sector than Berkley, and its lobbyists have been busy watering down Dodd-Frank through the regulatory process.

Glass-Steagall was originally enacted by Congress after 1932 hearings by the Senate Banking Committee into causes of the 1929 stock market crash. Those hearings—overseen by a committee with a Republican majority and Republican counsel—discovered conflicts of interest, underwriting of dubious securities, executive cash bonuses for sale of unsound securities, stock pools that artificially hiked stock prices—many of the same devices used in the early 21st century. Outrage that greeted the committee findings fueled passage of Glass-Steagall and two other pieces of legislation, but Congress and President Clinton in 1999—apparently convinced by lobbyists and libertarian economists that avarice had gone out of style—dismantled Glass-Steagall.

And as Sebelius notes, in spite of the experience of 2008, banks “too big to fail” could still take the country down in another financial crisis.

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Dennis Myers

Dennis Myers was the news editor of the Reno News & Review. He was a journalist for more than four decades. In 1987-88 he was chief deputy secretary of state of Nevada. He was coauthor of Uniquely...