I have actually never heard this argument.
The way I understand it is glass steagalls main role was to limit bank investments. I have read that Clinton repealled because it allowed for global markets to start. Then we started getting banks overspeculating and the eventual bubble of 2008. This then prompted the fangless Dodd Frank act to go through but it didnt stop banks from acting as their own insurance anyway when silicon valley thing happened this year.
Thats how I know it. If you have sources otherwise my infant brain would love to know.
The history of glass steaguall is not really an argument including it being limited way before its demise in the 90’s. Since its not an appeal to authority here https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_legislation#Decline_and_repeal
What you have shows that they found a supposed “loophole” but there is some problems with that. It was basically not applicable to most banks until the repeal of glass steagall. Frank-Dodd even tried to save pieces as a result of the 2008 crisis. Below are sections within glass steagall that were repealled.
Section 16 -
This section sets out the permissible securities activities of national banks (12 U.S.C. § 24 (Seventh)). No bank covered by Section 16’s prohibitions could buy, sell, underwrite, or distribute any security except as specifically permitted by Section 16. It prohibits banks from being a “market maker” or otherwise “dealing” in non-government (i.e., “bank-ineligible”) securities.
Section 20-
This section prohibited member banks from affiliating with firms engaged principally in securities activities (formerly codified at 12 U.S.C § 377). Section 20 only prohibited a bank from affiliating with a firm “engaged principally” in underwriting, distributing, or dealing in securities.
Section 32-
This section prohibited officer, director, and employee interlocks between member banks and securities firms (formerly codified at 12 U.S.C § 78). Under Section 32, a bank could not share employees or directors with a company “primarily engaged” in underwriting, distributing, or dealing in securities.
The Gramm-Leach-Bliley Act of 1999 (GLBA) repealed Sections 20 and 32. Sections 16 and 21 remained in effect until Clinton signed the repeal 8 days after GLBA took effect. Since its repeal, these sections have been tried to be reinstated in an attempt to seperate commercial banking from investment banking.
The Dodd-Frank Act had the Volcker rule (§ 619), which was an attempt to reinstate only a part of glass steagall (section 20). This rule essentially limited proprietary trading by banks and their affiliates to stop speculative trading. This is all we have now and apponents to the glass steagall sections also say we should have had something planned as a replacement… but we didnt. If you think we were toothless back then, you can assume we are 100% toothless now.
Too lazy to link sources.
This would make sense as globilization while going on since ww2 ended accelerated in the 80’s. Once the provisions there were eliminated it would effectively allow banks to offshore the activity anyway which made just eliminating it in the 90’s to make more sense. Since they were effectively doing it anyway.
