While AIG would've still gotten into the CDS business, banks like BofA, Wells Fargo, WaMu, etc wouldn't have been allowed into the securities game.

But their overseas competitors would, meaning that fraudulent securities still could pollute compliant US banks that also would be vulnerable to takeover from their suddenly rich competitors- including US investment banks who were flush with cash and had found ways to bypass the intent of G-S starting in the 1980s. If we remember that the whole point of the scam was to disguise toxic instruments as first-rate securities, you don't have to be a genius to figure out what would have come next. Picture sleepy little banks in po-dunk towns suddenly becoming enormously rich interbank trading players and you can see how the greedies still would have gotten their way.

Personally I agree with the viewpoint that while it is valid to separate retail deposits from risk, a single supervisory body is what is needed rather than a wall designed 80 years ago when international communications were via telegraph and interbank transfers involved paper. We need to accept that a generation of bankers has become accustomed to hugely disproportionate profits from sailing too close to the wind, so I'm afraid that we need to give more power to a single supervisory body responsible for figuring out and blocking whatever greedy destructive scheme will be tried next. Yeah, i know that you see government as necessarily incompetent but I'd place more trust in an incompetent pedant who knows he can't be blamed if he demands more and more paperwork to slow things down until he can get his head around it than the people who got us into this mess so they could drive Ferraris and enjoy their indoor tennis courts.