This is an EXCELLENT explanation of what happened -
Many don’t believe it was the Glass-Steagal repeal, written and proposed by the Repubs and signed into law by Clinton only after the repubs gave him and the left carte blanche with the Community Reinvestment Act. I believe BOTH were the beginning of our downfall. Both parties worked together against us. Read up on Citicorp Ruben. Gore, Udalls etc who piled millions into the EPA etc. How they’re so lauded today is beyond me.
The Clinton administration was one of our worst admins. Carter started the CRA but the Clintons took it to a whole other level along with the EPA and Education Dept - the latter was given to us by Carter. When the Clintons got the banks well...
In Canada, the Canada I grew up in, there was a Glass-Steagal-like provision that split financial services into four sectors. Any firm that wanted to conduct business had to stick to one of the four; no cross-ownership was allowed. The four sectors were: banks, trust companies (basically S & Ls), brokerage services and insurance. They used to be known as the "Four Pillars."
The Government of Canada allowed some cross-ownership starting in late 1987, and allowed complete cross-ownership in late 1991. Since then, Canadian banks have been permitted to own any financial institution they want.
Canada's financial-services sector was one of the few to get through the crisis of '08 largely unscathed - bloodied, yes, but unscathed. As for previous meltdowns, the same.
In order to claim that the repeal of the cross-ownership restrictions of Glass-Steagall was the major causative force, the difference between the American and Canadian experience has to be explained too. The CRA growing teeth might suffice.
(If anyone's interested, this master's thesis goes into the Canadian experience of cross-ownership deregulation.)