Did the 'Repeal' of Glass-Steagall Have Any Role in the Financial Crisis? Not Guilty. Not Even Close

Peter J. Wallison

No 2009-PB-09, NFI Policy Briefs from Indiana State University, Scott College of Business, Networks Financial Institute

Abstract: 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 1999,2 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 (search for similar items in EconPapers)
JEL-codes: G01 G18 G2 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2009-11
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