It All Comes Back to Bite You in the Glass

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Our own esteemed Justin Fox has been adding his rapidly-decreasing-in-real-dollar terms two cents to the story of the day; his counter-intuitive take on the legislative hijinks that led up to the crisis caught my eye:

Without Glass-Steagall repeal, Bank of America wouldn’t be able to buy Merrill Lynch, the only bit of arguably positive news to come out of this crazy weekend. And more generally, it is looking like investment banks that don’t have big consumer banking franchises aren’t up to the challenge of surviving modern-day financial crises. Of the five big independent investment banks that existed six months ago, only two survive.

Now it is true is that we failed to replace the archaic Glass-Steagall rules with a sensible, modernized regulatory structure. But don’t worry, we’ll be getting to that soon enough!

This note from the Corner’s John Derbyshire, however, tugged at my heartstrings:

[W]hen I first showed up on Wall Street I knew nothing about high finance and was reading up like crazy, trying to inform myself, and checking what I’d read with old Street hands around the office. Reading about Glass-Steagall’s “bright line” between investment and commercial banking, I asked a colleague how strictly that was enforced. He: “Oh, about, like, the sodomy laws.” That was in 1985.

He totally had a different Meese experience than I did!