Glass-Steagall, We Hardly Knew Ya’

And here I thought my Master’s thesis in banking policy would sit, dusty, on a shelf in perpetuity.  (Hey, any ray of light during this crisis, right?)

The Fed effectively killed Glass-Steagull today by allowing the last two remaining investment banks — Goldman Sachs and Morgan Stanley — to convert themselves into Bank Holding Companies.  Instead of being subject to SEC regulation, the banks will now be subject to Fed oversight.

It’s interesting to note that Glass-Steagull was originally enacted to prevent the worst excesses of the Robber Baron era from recurring.  In particular, the practice of the commercial banking arms of a financial institutions lending its own investment bank money and then using assets it issued itself to underwrite consumer lending.

Crazy days, folks.  Crazy days.