An interesting correlation derived at the TEDxWallStreet conference in early 2012 was between banking structure and jobs. The independently organized TED event conference was organized in partnership with Carbon NYC, a membership organization comprised of influential people in business, politics, and technology, among others. To join Carbon NYC, prospective members must demonstrate a high level of professional accomplishment, among other criteria.
According to one event speaker, Scott A. Shay, Chairman of the Board of Directors at Signature Bank, we can create jobs by dramatically changing the structure of the banking industry.
To do that, however, he said that we need to do three things.
First, big banks should be broken up into smaller, independent entities that lend to small businesses. The number of top banks has dwindled from 128 in the 1980s to just four in recent years, and they have become inaccessible to small businesses, which create a majority of jobs in the economy. Breaking them down would foster competition among banks.
Second, the Glass Steagall Act should be reinstated. The Act, which was repealed in 1999, kept risk speculative. Its repeal, however, led to one of the worst financial crises in recent history.
Third, big organizations should be given a reason to worry about a big bank’s credit worthiness. Because the nation’s capital is largely vested in relatively fewer banks, they have become “too big to fail” and prone to bailouts. Large organizations, which are major investors in such banks, should be made accountable for their investment decisions, Shay told conference attendees.