Did Gramm-Leach-Bliley Help Cause Today's Financial Turmoil?

by Don Boudreaux on September 21, 2008

in Current Affairs, Financial Markets, Regulation

Over at Marginal Revolution, Tyler Cowen argues — persuasively, in my view — that the repeal of the Glass-Steagall Act played no negative role in creating America’s current financial turmoil.

Comments Share Print Email

Methinks

Didn't read Tyler's post, but the dissolution of the GS Act didn't suddenly permit deposit institutions to gamble in the stock market and trade OTC derivatives with deposits. Investing and banking operations were still kept separate. There was nothing in the GS Act that prevented banks from engaging in loose credit standards, though. In other words, there was nothing in the GS Act that stopped banks from gambling in the housing market instead of the stock market.