This is an excellent article on how the banking industry effectively overcame legal obstacles that were put in place during the Great Depression. The intent of the Glass-Steagle bill was to prevent FDIC insured depository banks from taking the risks that were a normal part of investment banking. It started out by making minor changes one step at a time. It culminated in the Clinton Administration when Glass-Steagle was formally repealed. It didn't take much longer for the banking industry to move towards conglomeration. It became a too big to fail industry that earned most of its profits by developing and selling securities, and by placing bets on the direction that the prices of those securities would take. They no longer do an effective job of allocating capital to its most productive uses. That is clearly and old fashioned concept of banking.
The Great Depression produced a crisis that made banking regulation possible. It put an end to the "gilded age" that preceded the Great Depression. It took a long time to create the new "gilded age". The Great Recession provided an opportunity for politicians to put and end to it again. That was a missed opportunity. We may have to wait for the next crisis before it is politically possible to overcome the system that has been put in place to preserve it. On the other hand, we might follow the strategy of the banking industry. We can dismantle it one step at a time. We just need to figure out the most effective path to follow.
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