HJM 4006
In CommitteeHouse
Banking/Glass-Steagall act
Requesting that Congress enact legislation that would reinstate the separation of commercial and investment banking functions that were in effect under the Glass-Steagall act.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill is a formal request from the Washington State Legislature to the U.S. Congress to reinstate the Glass-Steagall Act, which separated commercial and investment banking to protect the public from financial crises. It argues that the 1999 repeal contributed to the 2008 recession and that restoring these safeguards would reduce systemic risk and prevent future bailouts.
- Urges the U.S. Congress to pass legislation (like H.R. 2714 or S.881) that reinstates the core protections of the Glass-Steagall Act of 1933.
- Calls for a strict separation between commercial banking (e.g., taking deposits, making loans) and investment banking (e.g., trading stocks, underwriting securities, speculative derivatives).
- Prohibits commercial banks and bank holding companies from investing in stocks, underwriting securities, or guaranteeing derivative transactions using customer deposits.
- Aims to prevent future taxpayer-funded bank bailouts by limiting risky behavior by institutions considered 'too big to fail'.
Who is affected
- Commercial banks and financial institutions — Commercial banks and bank holding companies would be prohibited from engaging in high-risk investment activities (e.g., trading stocks, underwriting securities, or speculative derivatives), potentially limiting their revenue streams but increasing stability and reducing risk of taxpayer-funded bailouts.
- Washington residents and taxpayers — Could reduce risk of job losses and foreclosures during financial crises by preventing banks from using depositors' money for risky bets, potentially stabilizing local economies and public services.
- Banking industry employees and compliance staff — May require restructuring of existing financial operations and internal compliance systems to comply with new separation rules, potentially increasing administrative costs.
- Policy advocates and financial reform organizations — Could benefit from reduced systemic risk and fewer future bailouts, aligning with party platforms and labor union policy positions supporting the bill.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
Restoring Glass-Steagall would reduce the risk of future financial crises that have historically triggered mass unemployment, business failures, and public service disruptions — disproportionately harming low- and middle-income communities.
Public SafetyPeopleRef: Section 2 (Whereas clauses), Section 3 (Resolved clause)Separating commercial and investment banking would prevent customer deposits — including retirement savings held in demand accounts — from being used in high-risk speculative activities, protecting everyday depositors from losses due to bank failures.
FinancialPeopleRef: Section 2 (Whereas clauses), Section 3 (Resolved clause)By reducing the probability of taxpayer-funded bailouts and systemic bank failures, the bill would help stabilize small business lending and reduce job losses in sectors dependent on credit availability — especially important for Washington’s small businesses and gig economy workers.
Business & EmploymentPeopleRef: Section 2 (Whereas clauses), Section 3 (Resolved clause)A more stable banking system would reduce the risk of housing market crashes like 2008, helping prevent foreclosures and price volatility that have disproportionately impacted Washington’s working families and communities of color.
HousingLean peopleRef: Section 2 (Whereas clauses), Section 3 (Resolved clause)Reducing systemic financial risk would decrease the frequency and severity of state and local budget crises caused by recession-related revenue drops and increased demand for safety-net programs — helping maintain public services in Washington’s communities.
Local GovernmentLean peopleRef: Section 2 (Whereas clauses), Section 3 (Resolved clause)
Potential Concerns (5)
Reduced systemic financial risk could lower the likelihood of future taxpayer-funded bailouts, decreasing the risk of sudden economic collapses that trigger widespread job losses, foreclosures, and public service cuts — especially during recessions.
Public SafetyPeopleRef: Section 1 (Preamble), Section 2 (Whereas clauses), Section 3 (Resolved clause)By preventing commercial banks from engaging in high-risk proprietary trading and securities underwriting, the bill could reduce the risk of bank failures that cause credit crunches, layoffs in financial services, and reduced lending to small businesses and households.
Business & EmploymentPeopleRef: Section 1 (Preamble), Section 2 (Whereas clauses), Section 3 (Resolved clause)Prohibiting commercial banks from using customer deposits for speculative activities (e.g., derivatives, securities underwriting) would protect household savings and checking accounts from being exposed to high-risk bets, enhancing deposit safety for everyday depositors.
FinancialLean peopleRef: Section 3 (Resolved clause)By reducing the likelihood of financial crises triggered by risky bank behavior, the bill could help prevent widespread foreclosures and stabilize housing markets — especially important in Washington, where housing affordability remains a major stress point.
HousingLean peopleRef: Section 2 (Whereas clauses), Section 3 (Resolved clause)A more stable financial system could reduce state and local budget volatility caused by recession-driven revenue shortfalls and increased demand for social services, helping maintain public services like education, infrastructure, and emergency response.
Local GovernmentLean peopleRef: Section 2 (Whereas clauses), Section 3 (Resolved clause)
Who Is Most Affected
Large national and regional banks (e.g., Wells Fargo, Bank of America, regional banks with investment arms) would face structural separation requirements, limiting revenue from proprietary trading and underwriting — but gaining stability and reduced regulatory uncertainty.
Most Washington residents would benefit from reduced risk of financial crises, job losses, and foreclosures — especially low- and middle-income households who rely on FDIC-insured deposits and are most vulnerable to economic shocks.
Bank employees in investment arms (e.g., trading, structuring derivatives) may face job displacement or restructuring, while compliance and risk management staff may see increased demand — net effect likely negative for some segments of the workforce.
Community banks and credit unions that do not engage in investment banking would benefit from reduced competitive pressure from large banks’ hybrid operations and from a more stable macroeconomic environment.
Wealthy individuals and institutional investors who benefit from speculative returns on derivatives, securities underwriting, and proprietary trading would see reduced opportunities — though they are less reliant on FDIC-insured deposit safety.