[smcin]

Re Glass-Steagall and 2008 crisis, Robert Reich and Elizabeth Warren disagree with you [https://robertreich.org/post/124114229225]. According to you, which legislation prevented the conflict-of-interest in banks writing trillions in subprime mortgages decades prior to 1999? or securities firms selling CDOs backed by subprime MBS? IIUC, the issue in 2008 was never "preventing mortgage CDOs" outright, but preventing the inflated valuations on junk tranches of subprime, i.e. mortgage lenders allowing securities sellers to intentionally create and sell junk with their assets.

(and I clearly didn't say Glass-Steagall would have done anything for SVB or Signature; I was saying banks like Chase's selective edit of the chain of events around 2008 was a whitewash because it omitted mention of key events.)

[JumpCrisscross]

> Reich and Elizabeth Warren disagree with you

They argue that "nonbanks got their funding from the big banks in the form of lines of credit, mortgages, and repurchase agreements" and if "big banks hadn’t provided them the money, the nonbanks wouldn’t have got into trouble." But nonbank funding channels were already alive, well, and causing chaos in the 1990s (LTCM) and before (S&Ls). Sure, banks juiced the problem. But it didn't start the fire, it didn't bring the fire home and it didn't meaningfully alter the fire's trajectory. And there is no evidence that their large depositors would have sat there if nonbanks offered competitive rates fueled by their nonsense.

As we've seen this cycle, banks and nonbanks will chase yield when rates are low and credit is cheap. To argue that e.g. SoftBank wouldn't have SoftBanked if JPMorgan and JPMorgan Securities were separate misses the forest for the trees.

> securities firms selling CDOs backed by subprime MBS

Bank originates mortgage. Bank sells mortgage to securities firm. Securities firm issues as CDO. Nothing about this requires the lending arm and securities arm be under the same roof. Mortgage CDOs became a thing because of computers, not Glass-Steagall.

Proponents of reinstating Glass-Steagall are broadly well intentioned. But there are real financial regulations that have real impact that this discussion crowds out.

[makomk]

Robert Reich and Elizabeth Warren have massive partisan and ideological axes to grind, and their careers basically rely on convincing people that it's all the fault of big businesses convincing the government to lift regulations and that they could fix all of this if voters only gave them and their side the power.

[smcin]

What specifically is the most incorrect claim/belief Reich and Warren have? And why is it that banks don't fail in Canada?

"it's all the fault of [hyperbole] big businesses convincing the government to lift regulations". Well who else was lobbying govt to roll back banking regulations, in the 1990s?

Which lobbyists paid former Sen. Phil Gramm? Gramm's wife Wendy as CFTC chairwoman till 1993 issued regulations that legalized the type of electricity trading that helped Enron make millions in illegal profits. In 1993 joined Enron and ended up on its audit committee, where she approved all the shenanigans. She made $ out of Enron, while her husband was passing legislation to help it, and Enron lobbyists contributing to his campaign.

Phil Gramm ended up on the board of UBS, and a McCain adviser on the economy. Insanity.

"...if voters only gave them and their side the power." Start by ending the revolving door. That's not "giving their side the power".