Are Smaller Banks Better for Politics?

Are Smaller Banks Better for Politics?

Earlier this week University of Chicago Professor Luigi Zingales offered an interesting, although I suspect commonly held, reason for his conversion to supporting a new “Glass-Steagall.”  For those who don’t follow banking, Glass-Steagall, passed as part of the New Deal, mandated the separation of investment and commercial banking.  This reason?  Professor Zingales asserts that Glass-Steagall “helped restrain the political power of banks.”  More fully, he argues:

Under the old regime, commercial banks, investment banks and insurance companies had different agendas, so their lobbying efforts tended to offset one another.  But after the restrictions ended, the interests of all...