Glass-Steagall was inacted in 1933 to separate commercial banking and investment banking. Most of it was repealed in 1999, and there have been serious bank problems since then.
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Yes, I agree that deregulation of the banks and brokerage firms has been a disaster ... and it continues to grow. There are a few legislators who talk about reviving Glass Steagall, and I hope comments like yours encourage them to proceed.
I never thought about applying the Glass-Steagall Banking laws to mortgage companies, but it is a great suggestion.
Thank you, LandmarkWealth, for your well thought out comments. It is a very controversial issue, I know. Personally, I think the banking system was operating a bit more smoothly before Glass-Steagall was gutted. However, I know some disagree.
Bank of America, Wells Fargo Bank, WM - these institutions took on risky mortgages due to the fact that Clinton era wording of policy at GSE's (or libberal interpretation) led to what is no more than mortgage speculation.New Steagall to define limit.
Banks don't like to loan money to people who can't pay them back. But if the GSE's will buy the loan off of your books, then why not. Gov't intervention for the purpose of social engineering creates market disloacations.
A good review of what Glass-Steagall was and was not, see http://www.wnyc.org/articles/its-free-country/2011... Article will help them who question Glass-Steagall tothink again.Would have helpd