>>>The old law prevented "a bank holding company from owning other financial companies". Exactly one of those which were enacted in the thirties to prevent speculation, gets repealed after twenty years and a million dollars worth of lobbying, and under impeachment pressure. This kind of deregulation of finances took only ten years to bear fruit.
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>>This deregulation has nothing to do with current situation.
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>I didn't say "this deregulation", I said "this kind of deregulation". Deductive, not inductive - I wasn't trying to induce a general statement from this one example; I mentioned a general phenomenon as it applied to this example.
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>Also, in one of the articles at the start of this thread there was a mention that the law which was passed ten years ago also enabled them to repackage mortgages into securities and all the other juggling that wasn't previously allowed. That's deregulation too.
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>> Both Bear Stearns and Lehman Brothers did not use Gramm legislation, i.e. they didn't go to retail business. On the contrary, JPMorgan did it (by merging with Chase), and it is currently the stablest bank around.
>>I also wonder how prohibition to merge saving and investment banks could prevent 'speculation'.
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>I don't understand how it worked before 1933, so I had to take the story that it was supposed to prevent speculation (real or under quotation marks) at face value. Whether it really worked is really a question - but then it was obviously an obstacle, or else Citibank wouldn't have spent 200 million to lobby for repeal. And, also, how many bank system crashes were there meanwhile? Pretty much none of a larger scale, until the savings and loan scandal, which was made possible by deregulation.

Glass-Seagall was adopted with the purpose to prevent saving banks from playing stock market too much. Period.
Its repeal in 1999 was highly popular, and passed in bipartisan fashion, because everyone wanted to be on market at that point. That's it.
Current financial situation is caused, shortly speaking, by derivatives blowout. Probably, you heard about CDOs, ARSs, etc; it is just a tip. There was nothing in Glass-Seagall dealing with this stuff. It has never been regulated, primarily because nobody knows exactly what is this. At least, Greenspan said openly that he does not have exact knowledge. Basically, it is a very complicated subject and throwing superficial links is just not serious.