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.
Did Gramm-Leach-Bliley Help Cause Today's Financial Turmoil?
Previous post: A Letter Inspired by Julian Simon's Insights
Next post: Infrastructure
Podcast RSS Feed
Full EconTalk Text
{ 2 comments }
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.
BOB BRINKER SAYS THAT THE GS ACT WAS ONE OF THE CAUSES OF THE RECENT FINANCIAL MELT DOWN.