Did the 'Repeal' of Glass-Steagall Have Any Role in the Financial Crisis? Not Guilty; Not Even Close
Networks Financial Institute, Policy Brief 2009-PB-09
17 Pages Posted: 18 Nov 2009
Date Written: November 2009
Ever since severe turmoil enveloped the financial markets in the fall of 2008, commentators have blamed deregulation of the financial system, and specifically the supposed “repeal” of the Glass-Steagall Act by the Gramm-Leach-Bliley Act of 1999, for the crisis. This has led many to advocate a restoration of the separation of commercial and investment banking that was supposedly the essence of the Glass-Steagall Act. These statements reflect a remarkable degree of ignorance about something that could be easily understood with a small amount of research. In this paper, I will outline the provisions of the Glass-Steagall Act, and show that it did not and could not have had any significant effect in creating or exacerbating the financial crisis.
Keywords: Glass-Steagall Act, Gramm-Leach Bliley Act, Financial Crisis, Financial Regulatory Reform
JEL Classification: G2, G01, G18
Suggested Citation: Suggested Citation