More on Glass-Steagall

Professor Kling, joins my argument:

I have yet to hear one coherent explanation of how the relaxation of Glass-Steagall caused this crisis. At least the proponents of the view that it was all the Community Reinvestment Act (a view which I do not endorse) have a story to tell.

Again, I'd point out that the narrative doesn't fit the evidence.  If the blame rests on Glass-Steagall, wouldn't we see the most integrated banks (integration between commercial and investment banks) being in the worst shape?  If so, how do we explain the success of JP Morgan and the failure of all the stand-alone investment banks (except Goldman and Morgan, but who knows what would have happened had they been prevented from forming bank holding companies).

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