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Undoing Glass-Steagall Did Not Cause Crisis
...There's no evidence any bank, including Citibank, got into trouble because of a securities or insurance affiliate. The banks that suffered subprime losses were engaged in activities — namely, mortgage lending — that were always permitted by Glass-Steagall. And none of them was affiliated at the time with the investment banks that got into trouble — namely, Lehman, Bear Stearns and Merrill Lynch, which overinvested in subprime securities. And they did so after Fannie Mae and Freddie Mac made a huge market for such investments in response to political pressure from HUD to meet affordable housing goals. Finally, Glass-Steagall deregulation had nothing to do with the gutting of traditional mortgage underwriting standards — the core cause of the crisis....