> Just as without the repeal of Glass-Steagal the housing-backed derivative market doesn't take off, threatening commercial banks' solvency.
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>Can you tell me exactly what part of G-S is supposed to have exerted this effect? AFAICS a huge chunk of the subprime exposure wasn't covered by G-S in the first place. All the repeal seemed to affect was the distribution of profit.

G-S prevented commercial banks from using their depositors money to finance profit-making investments other than loans. Once repealed, commercial banks were able to use their depositors money to engage in the much riskier investments including the derivative markets. In addition they were able to further leverage those investments via CDSs.