Correction, he USED to be a powerful thinker, then Bush Derangement Syndrone drove him nuts.
THE primary study of Glass-Steagall shows that it was based on 100% wrong premises. The idea was that in the Roaring 20s banks had brokerage companies that poured depositor money into the market, weakening the banks thus accelerating the bust.
No.
Eugene White found just the opposite—that banks with brokerages were the leadt likely to fail & were stronger because they diversified their assets. Think of S&Ks in 1970s, stuck in fixed mortgages when interest rates skyrocketed. They had no diversification of assets.
G-S would weaken the banks & make another crash easier.
Must disagree with you here.
True, diversification is a good thing and makes banks stronger, more crash proof.
However, strengthening banks isn’t the only issue. Another issue is whether investors are bearing agreed upon risks and receiving commensurate returns.
When a bank is able to invest low interest savings in high risk instruments, and then also benifit from taxpayer funded insurance or bail outs in the event of a failure, the wrong investors are bearing the risks.
People who place their savings in very low return savings accounts or CDs, do so specifically to avoid risk. Let the investors earning high rates of interest take the risk.