Glass-Steagall is nothing more than a beloved buzz word that people like to throw around to sound like they know what they’re talking about. They don’t know what it is, they don’t know what it says, they don’t know when it was enacted and they don’t even know what president signed the (partial) repeal…(not Bush…and I guarantee you more than 99 times out of 100, they won’t be able to tell you it was a partial repeal). All they know is it was a financial regulation repeal that took place at some point in history close enough to be able to blame the crisis on it…and the only reason they know that is because they heard someone else say it. And of course this is perpetuated by useless films like Inside Job.
As Golden State Liberty blog notes:
The best they can do is to cite the partial repeal of the Glass-Steagall Act in 1999, and even this argument weakens on examination. The repeal (known as Gramm-Leach-Bliley) merely eliminated a provision that prohibited commercial banks and investment banks from existing under the same corporate umbrella, a provision that exists nowhere else in the world; other elements of Glass-Steagall, including those prohibiting commercial banks from underwriting or trading in securities and those prohibiting securities firms from taking deposits, were left intact, and other laws exist to prevent investment banks from unloading toxic securities onto commercial affiliates. Are we really supposed to believe that this repeal created some new sort of trading activity whose effects brought the world’s financial system to its knees?
When people mention the words “glass steagall”, ask them what it is. Just ask “what is that?” See what happens. Same thing when they have any policy recommendation.