but he totally wrecks Cornel West in this recent TV interview that I have deemed a must watch.  Once Cornel West makes a fortune off of reading the market, I’ll start listening to his explanations of crises.

By the way, I’m fairly certain that everyone who pines for Glass-Steagall does not know what the hell it did. In a classic post from 09/08 Megan McArdle explained:

Even if you ignore the economic history indicating that Glass-Steagall didn’t help the crisis it was meant to solve–even if you assume, arguendo, that the repeal was a bad idea–there’s simply no logical reason to believe it had anything to do with the current mess.

Securitization was not introduced in the 1990s; it was invented in the 1970s and became popular in the 1980s, as chronicled in Liar’s Poker.   (As an aside, if you haven’t read it, you really must.  Especially now).

[The Gramm-Leach-Bliley act, which “repealed” Glass-Steagall] had nothing to do with either lending standards at commercial banks, or leverage ratios at broker-dealers, the two most plausible candidates for regulatory failure here.

Most importantly, commercial banks are not the main problems.  If Glass-Steagall’s repeal had meaningfully contributed to [the 2008] crisis, we should see the failures concentrated among megabanks where speculation put deposits at risk.  Instead we see the exact opposite:  the failures are among either commercial banks with no significant investment arm (Washington Mutual, Countrywide), or standalone investment banks.  It is the diversified financial institutions that are riding to the rescue.



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