Did the 'Repeal' of Glass-Steagall Have Any Role in the Financial Crisis? Not Guilty; Not Even Close
Peter J. Wallison
American Enterprise Institute (AEI)
Networks Financial Institute, Policy Brief 2009-PB-09
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.
Number of Pages in PDF File: 17
Keywords: Glass-Steagall Act, Gramm-Leach Bliley Act, Financial Crisis, Financial Regulatory Reform
JEL Classification: G2, G01, G18working papers series
Date posted: November 18, 2009
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