The so-called repeal of the Glass-Steagall Act of 1933 in 1999 is sometimes blamed for the financial crisis. Glass-Steagall was not in fact repealed. Only the provision prohibiting a commercial bank and an investment bank from being controlled by the same holding company was repealed.
Thanks to Robert Wenzel for pointing out this article from (of all places) the Washington Post, which points out the weaknesses in the argument:
Facts such as that Bear Stearns, Lehman Brothers and Merrill Lynch — three institutions at the heart of the crisis — were pure investment banks that had never crossed the old line into commercial banking. The same goes for Goldman Sachs, another favorite villain of the left.
The infamous AIG? An insurance firm. New Century Financial? A real estate investment trust. No Glass-Steagall there.
Two of the biggest banks that went under, Wachovia and Washington Mutual, got into trouble the old-fashioned way – largely by making risky loans to homeowners. Bank of America nearly met the same fate, not because it had bought an investment bank but because it had bought Countrywide Financial, a vanilla-variety mortgage lender.
Meanwhile, J.P. Morgan and Wells Fargo — two large banks with big investment banking arms — resisted taking government capital and arguably could have weathered the crisis without it.