[quote=jonnycsd]The OP insinuates that repealing Glass Stegal and allowing banks, insurance co’s and securities dealers to be owned by the same parent company caused the housing bubble / mortgage mess.
Can anyone explain how these two things are even remotely related?
Thanks![/quote]
Jonny,
I agree with you.
The point of the article, written in 1999, is that repealing the Glass Stegal could lead to this:
The separation of banking and the stock exchange was ordered in response to revelations of the gross corruption and manipulation of the market by giant banking houses, above all the House of Morgan, which organized huge corporate mergers for its own profit and awarded preferential access to share issues to favored politicians and businessmen. Such insider trading played a major role in the speculative boom which preceded the 1929 crash.
Unless someone can explain it to me, I don’t see in any way how this type of a situation (which the author predicted could occur with the repeal of the Glass Stegal act) caused the problem we are now experiencing.
I thought this board had been in general agreement that it was the separation of mortgage lending and the stock market that caused the situation we are in, not the merging of institutions.
i.e., separating mortgage lending from the holders of the loans on Wall Street caused the lenders not to care one iota if the loans could be repaid.
