In 1999, Congress approved the Gramm-Leach-Bliley bill, which essentially nullified the Glass-Steagall Act. Denninger quotes a NYT article from the time of the GLB passage:
The decision to repeal the Glass-Steagall Act of 1933 provoked dire warnings from a handful of dissenters that the deregulation of Wall Street would someday wreak havoc on the nation's financial system. The original idea behind Glass-Steagall was that separation between bankers and brokers would reduce the potential conflicts of interest that were thought to have contributed to the speculative stock frenzy before the Depression.
and he provides this brilliant comment:
"Funny how we waited until everyone who went through that special Hell known as "The Depression" were dead, then we simply rode roughshod over what they taught us and declared them "fools."
Luckily for us, not everyone called them complete fools. Guess who didn't?
Ron Paul's comments on the Gramm-Leach-Bliley act:
Madam Speaker, today we are considering a bill aimed at modernizing the financial services industry through deregulation. It is a worthy goal which I support. However, this bill falls short of that goal. The negative aspects of this bill outweigh the benefits. Many have already argued for the need to update our financial laws. I would just add that I agree on the need for reform but oppose this approach.
With the economy more fragile than is popularly recognized, we should move cautiously as we initiate reforms. -[PAUL SAID THIS IN 1999!]
He offered an alternative.
The better alternative is to repeal privacy busting government regulations. The same approach applies to Glass-Steagall and S. 900. Why not just repeal the offending regulation? In the banking committee, I offered an amendment to do just that. My main reasons for voting against this bill are the expansion of the taxpayer liability and the introduction of even more regulations. The entire multi-hundred page S. 900 that reregulates rather than deregulates the financial sector could be replaced with a simple one-page bill.