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

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  • Peter J. Wallison

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.

Suggested Citation

  • Peter J. Wallison, 2009. "Did the 'Repeal' of Glass-Steagall Have Any Role in the Financial Crisis? Not Guilty. Not Even Close," NFI Policy Briefs 2009-PB-09, Indiana State University, Scott College of Business, Networks Financial Institute.
  • Handle: RePEc:nfi:nfipbs:2009-pb-09
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    More about this item

    Keywords

    Glass-Steagall Act; Gramm-Leach Bliley Act; Financial Crisis; Financial Regulatory Reform;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G01 - Financial Economics - - General - - - Financial Crises
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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