The poor are not the problem, Its the banks.

[Kasz216]

snyps said:

Lafiel said:

the way banks are now it wasn't possible to just drop them (the biggest ones ofcourse) without severly hurting the economy (much more than it has been hurt by bailing them out)

that's why I believe we would be better off if we had a maximum size (depending on the amount of money they handle) for banks after which they need to be split into 2 independend companies

every private company needs to be able to go bankrupt without single handedly driving the world economy into a recession

If congress hadn't repealed the Glass Steagall Act they would not have been to big to prosecute/fail.  The act was created to prevent another Great Recession.  It prevents Banks and Insurance and Investment houses from being ONE. 

While accepting that under Glass–Steagall financial firms could still have “made, sold, and securitized risky mortgages, all the while fueling a massive housing bubble and building a highly leveraged, Ponzi-like pyramid of derivatives on top,” the New Rules Project concludes that commentators who deny the GLBA played a role in the financial crisis “fail to recognize the significance of 1999 as the pivotal policy-making moment leading up to the crash.” The Project argues 1999 was Congress’s opportunity to reject 25 years of “deregulation” and “confront the changing financial system by reaffirming the importance of effective structural safeguards, such as the Glass–Steagall Act's firewall and market share caps to limit the size of banks; bringing shadow banks into the regulatory framework; and developing new rules to control the dangers inherent in derivatives and other engineered financial products.”

In theory maybe... but not in practice.   Banks were allowed to offer investment services and vice versa long before Glass Stegal was repealed.

 

By the time it was repealed all Glass-Steagal stopped was the merging of banks.

Also, it's worth pointing out the banks that first failed were all investment banks.   They weren't the investment/Retail combos that Glass-Steagal prevented.

http://dealbook.nytimes.com/2012/05/21/reinstating-an-old-rule-is-not-a-cure-for-crisis/

Glass-Steagal likely could of made the crisis slightly smaller but I think your overstimating it's impact.  A lot of banks just organically grew instead of merging.  Or aquired stuff that they could of aquired anyway.

It's also worth noting just how popular Glass Steagal was.... Both Republicans and Democrats voted for it uniformly... mostly because Europeon banks were crushing us because they didn't have the same rule.  

Granted Europeon banks don't loo so good now but for different reasons.

 

Really it was more regulators not doing their job.  Not that there weren't laws in place.  Just nobody did their job.  

During the Savings and Loan crisis 1,000 bankers went to jail.  Granted there was more fraud during that crisis.