First thing: Separate investment banking from regular banking

[MrScorpio]

Combining the two has always been a shit sandwich for the little guy… And even some of the banks suffered as well because of this turkey.

I'd start there.

[Fresh_Start]

1. create some criminal statutes for fraud which would include

actions like the banks did telling investors one thing and saying something else internally

[MrScorpio]

4. Put some teeth in the SEC..

And sic 'em on the offenders.

[redqueen]

2. Un-repeal the Glass-Steagall Act?

[supernova]

3. Yep

It was stupid to repeal G-S.

[redqueen]

11. Not so much stupid as calculatedly evil.

Greedy $&#*@(^ pigs. They knew why it was necessary in the first place, but they just had to have their own Gilded Age.

[MrScorpio]

5. That's a bingo!

[Fresh_Start]

7. that may have been a contributing factor but it wasn't the direct cause

safety and soundness by itself should have been sufficient IFF the regulators had been doing their jobs.

[MilesColtrane]

9. It was, however, the direct cause of the taxpayer bailout.

Few would care if we lost some investment banks and the commercial banks were left standing.

[redqueen]

12. Precisely. (nt)

[FarCenter]

13. Investment banks held many money market fund accounts

This started with the Merrill Lynch Cash Management Account, the Dreyfus Money Market Fund and others decades ago.

Lots of individuals and most business held funds in MMFs because the drew interest at short term rates, while still providing ready access to the money.

Had the investment banks gone down, the MMFs would have been unavailable, and business in the US would have stopped. In fact, one MMF that served businesses did "break the buck" and a run started before Treasury stepped in and guaranteed balances in the MMFs.

[valerief]

6. Yes, but rich people get richer from it, and making rich people richer is the most important thing

in the world.

[FarCenter]

8. Most of the housing bubble and mortgage mess was created by non-banks -- GS would not apply

Lehman Brothers, Bear Stearns, Goldman Sachs, Morgan Stanley, Merrill Lynch, CountryWide, GE Capital, Golden West, IndyMac, WaMu, GMAC, AIG, CIT and others were either investment banks only, or they were thrifts, or they were non-bank financial institutions.

None of the above were banks before the end of 2008 when they had either been merged into banks under the urging of the US Government in order to rescue them or had converted at least part of their corporation to a bank in order to access the Federal Reserve discount window to get loans.

Citigroup was really the only go-go player bank in the mortgage market during the bubble, and wholesaled a lot of mortgages into bad mortgage backed securities.

The JP Morgan investment bank did securitization, but mainly Chase and ex Bank One mortgages. The bad stuff in their portfolio mainly comes from Bear Stearns and WaMu.

Bank of America's bad stuff is mostly from CountryWide and Merrill Lynch.

Wells Fargo's bad stuff is mostly from Golden West via the Wachovia Merger, although both they and BofA have extra losses from having large operations in non-recourse mortgage states like CA, AZ, NV and FL.

[banned from Kos]

10. Exactly --- you know your mortgage crisis

also, Canada has no G-S and had no mortgage crisis.

Lack of G-S is the left's CRA scapegoat.