Why is Bernie lying? He knows Glass-Stegall had very little to do with
the crash of 2008. That crash was caused by the shadow banking industry that wasn't affected by Glass-Stegall. That industry didn't even EXIST during the Glass-Stegall era.
If you don't believe me, do you believe Elizabeth Warren? She acknowledges that Glass-Stegall wouldn't have prevented the crash.
I guess Bernie's just another politician after all.
http://dealbook.nytimes.com/2012/05/21/reinstating-an-old-rule-is-not-a-cure-for-crisis/?_r=0
Bringing back something akin to Glass-Steagall would clearly help limit risk in the system. And that’s a very good and worthy goal. Letting banks sell securities and insurance products and services allowed them to grow too big too fast, and fueled a culture that put profit and pay over prudence.
But here’s the key: Glass-Steagall wouldn’t have prevented the last financial crisis. And it probably wouldn’t have prevented JPMorgan’s $2 billion-plus trading loss. The loss occurred on the commercial side of the bank, not at the investment bank. But parts of the bet were made with synthetic credit derivatives — something that George Bailey in “It’s a Wonderful Life” would never have touched.
When I called Ms. Warren and pressed her about whether she thought the financial crisis or JPMorgan’s losses could have been avoided if Glass-Steagall were in place, she conceded: “The answer is probably ‘No’ to both.”
http://www.investopedia.com/ask/answers/050515/did-repeal-glasssteagall-act-contribute-2008-financial-crisis.asp
The repeal of the Glass-Steagall Act was a minor contributor to the financial crisis, if it contributed to the crisis at all. At the heart of the 2008 financial crisis was nearly $5 trillion worth of basically worthless mortgage loans. Since non-bank lenders originated the overwhelming majority of these mortgages, an attempt to blame the financial crisis on a failure of banking regulation represents a logical disconnect from the facts of the situation.
The portion of the repealed Glass-Steagall Act of 1933 on which some economists try to pin the blame for the financial crisis is the part that prevented banks from operating as both commercial or retail banks and investment banks. The theory is that allowing banks to act in both the commercial and investment fields somehow was responsible for the creation of all the mortgage-backed derivatives that were eventually shown to be worth less than the paper on which they were written. This theory cannot be supported by the facts, however. The buyers of over half of the subprime mortgages in the 10 years leading up to the 2008 crisis were not banks – either commercial, investment or both – but Fannie Mae and Freddie Mac.
Many of the mortgage-backed derivatives were created and sold by banks, but there is virtually no connection between that fact and the Glass-Steagall Act. Lehman Brothers, Bear Stearns and Merrill Lynch, along with Goldman Sachs, were all major players in the subprime mortgage meltdown, but none of these investment banks had ever taken advantage of the repeal of the Glass-Steagall Act and ventured into commercial banking. They were strictly investment banks, just as they had been before Glass-Steagall was repealed.
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and so many others including Rubin push for years to eliminate the landmark banking reform act of 1933 under FDR? What a crock, lie. And it's STEAGALL.
