"Dealbook" columnisst Andrew Ross Sorkin pokes a liberal sacred cow:
A meme around Glass-Steagall has been created, repeated so often that it has almost become conventional wisdom: the repeal of Glass-Steagall led to the financial crisis of 2008. And, the thinking goes, has become almost religious for some people, that if the law were reinstated, we would avoid the next crisis.
The facts — basic facts — just aren't that convenient. While the repeal of Glass-Steagall has seemingly become the sine qua non of the financial crisis, it is pure historical revisionism. […]
Glass-Steagall wouldn't have prevented the last financial crisis. And it probably wouldn't have prevented JPMorgan's $2 billion-plus trading loss. The loss occurred on the commercial side of the bank, not at the investment bank. […]
The first domino to nearly topple over in the financial crisis was Bear Stearns, an investment bank that had nothing to do with commercial banking. Glass-Steagall would have been irrelevant. Then came Lehman Brothers; it too was an investment bank with no commercial banking business and therefore wouldn't have been covered by Glass-Steagall either. After them, Merrill Lynch was next — and yep, it too was an investment bank that had nothing to do with Glass-Steagall.
Next in line was the American International Group, an insurance company that was also unrelated to Glass-Steagall. While we're at it, we should probably throw in Fannie Mae and Freddie Mac, which similarly, had nothing to do with Glass-Steagall.
More in that vein here. My favorite part of the column comes when Sorkin gets Democratic Senate candidate Elizabeth Warren to reluctantly admit that the restoration of Glass-Steagall probably would not have prevented everything she likes to rail against, despite her constant messaging to the contrary.
In my conversation with Ms. Warren she told me that one of the reasons she's been pushing reinstating Glass-Steagall — even if it wouldn't have prevented the financial crisis — is that it is an easy issue for the public to understand and "you can build public attention behind."
She added that she considers Glass-Steagall more of a symbol of what needs to happen to regulations than the specifics related to the act itself.
What the world needs less of: symbolic governance.
Reason came to similar conclusions about Glass-Steagall a little earlier in the debate.
UPDATE: I should point out, since commenters seem to be confused about it, that the "Elizabeth Warren says" image here was put there by me (note alt text), and is not an ingenious (or foolish) advertisement.