Editing Gramm–Leach–Bliley Act (section)

==Reception==
{{See also|Subprime mortgage crisis#Causes}}

===Defenses===

According to a 2009 policy report from the [[Cato Institute]] authored by one of the institute's directors, [[Mark A. Calabria]], critics of the legislation feared that, with the allowance for mergers between investment and commercial banks, GLBA allowed the newly-merged banks to take on riskier investments while at the same time removing any requirements to maintain enough equity, exposing the assets of its banking customers.<ref name=Calabria>{{cite web |last=Calabria |first=Mark A. |publisher=[[Cato Institute]] |url=http://www.cato.org/pubs/policy_report/v31n4/cpr31n4.pdf |title=Did Deregulation Cause the Financial Crisis? |date=July–August 2009 |access-date=2009-07-28 |url-status=dead |archive-url=https://web.archive.org/web/20090726004605/https://www.cato.org/pubs/policy_report/v31n4/cpr31n4.pdf |archive-date=2009-07-26 }}</ref>{{Primary source inline|date=October 2011}} Calabria claimed that, prior to the passage of GLBA in 1999, investment banks were already capable of holding and trading the very financial assets claimed to be the cause of the mortgage crisis, and were also already able to keep their books as they had.<ref name=Calabria /> He concluded that greater access to investment capital as many investment banks went public on the market explains the shift in their holdings to trading portfolios.<ref name=Calabria /> Calabria noted that after GLBA passed, most investment banks did not merge with depository commercial banks, and that in fact, the few banks that did merge weathered the crisis better than those that did not.<ref name=Calabria />

In February 2009, one of the act's co-authors, former Senator Phil Gramm, also defended his bill:
{{blockquote|[I]f GLB was the problem, the crisis would have been expected to have originated in Europe where they never had Glass–Steagall requirements to begin with. Also, the financial firms that failed in this crisis, like [[Lehman Brothers|Lehman]], were the least diversified and the ones that survived, like [[JPMorgan Chase|J.P. Morgan]], were the most diversified. Moreover, GLB did not deregulate anything. It established the Federal Reserve as a superregulator, overseeing all Financial Services Holding Companies. All activities of financial institutions continued to be regulated on a functional basis by the regulators that had regulated those activities prior to GLB.<ref>[[Phil Gramm]], [https://www.wsj.com/articles/SB123509667125829243 "Deregulation and the Financial Panic"] {{webarchive|url=https://web.archive.org/web/20170811060239/https://www.wsj.com/articles/SB123509667125829243 |date=2017-08-11 }}, opinion pages of ''[[The Wall Street Journal]]'', published and retrieved on February 20, 2009</ref>}}

[[Bill Clinton]], as well as economists [[Brad DeLong]] and [[Tyler Cowen]] have all argued that the Gramm–Leach–Bliley Act softened the impact of the crisis.<ref>[http://www.factcheck.org/2008/10/who-caused-the-economic-crisis/ Who Caused the Economic Crisis?] {{webarchive|url=https://web.archive.org/web/20140701090228/http://www.factcheck.org/2008/10/who-caused-the-economic-crisis/ |date=2014-07-01 }}. [[FactCheck.org]] October 1, 2008.</ref><ref>{{cite magazine|last=Bartiromo|first=Maria|magazine=Bloomberg Business|url=https://www.bloomberg.com/bw/stories/2008-09-23/bill-clinton-on-the-banking-crisis-mccain-and-hillary|title=Bill Clinton on the Banking Crisis, McCain, and Hillary|date=2008-09-23|access-date=2016-02-02|url-status=live|archive-url=https://web.archive.org/web/20150331041223/http://www.bloomberg.com/bw/stories/2008-09-23/bill-clinton-on-the-banking-crisis-mccain-and-hillary|archive-date=2015-03-31}}</ref> ''[[Atlantic Monthly]]'' columnist [[Megan McArdle]] has argued that if the act was "part of the problem, it would be the commercial banks, not the investment banks, that were in trouble" and repeal would not have helped the situation.<ref>[http://meganmcardle.theatlantic.com/archives/2008/09/hindsight_regulation.php Hindsight regulation] {{webarchive|url=https://web.archive.org/web/20090330063344/http://meganmcardle.theatlantic.com/archives/2008/09/hindsight_regulation.php |date=2009-03-30 }}. [[Megan McArdle]]. ''[[Atlantic Monthly]]''. September 16, 2008</ref> An article in the [[Conservativism in the United States|conservative]] publication ''[[National Review]]'' has made the same argument, calling allegations about the Act "[[folk economics]]."<ref>[http://article.nationalreview.com./?q=Mzk3MzFiYWY3NjUyNzUyNzA4MzYzNTk2ZDVhMDFiMWE= Villain Phil] {{webarchive|url=https://web.archive.org/web/20100109224356/http://article.nationalreview.com/?q=Mzk3MzFiYWY3NjUyNzUyNzA4MzYzNTk2ZDVhMDFiMWE= |date=2010-01-09 }}. ''[[National Review]]''. September 22, 2008.</ref> A ''[[New York Times]]'' financial columnist and occasional critic of GLBA [[Andrew Ross Sorkin]] stated that he believes GLBA had little to do with the failed institutions.<ref>{{cite news|url=https://dealbook.nytimes.com/2012/05/21/reinstating-an-old-rule-is-not-a-cure-for-crisis/?ref=business|title=Reinstating an Old Rule Is Not a Cure for Crisis|author=Andrew Ross Sorkin|author-link=Andrew Ross Sorkin|newspaper=New York Times|date=May 22, 2012|url-status=live|archive-url=https://web.archive.org/web/20170708164432/https://dealbook.nytimes.com/2012/05/21/reinstating-an-old-rule-is-not-a-cure-for-crisis/?ref=business|archive-date=July 8, 2017}}</ref>

===Criticisms===
The act is often cited as a cause of the [[2007 subprime mortgage financial crisis]] "even by some of its onetime supporters."<ref>[[David Leonhardt|Leonhardt, David]]. [https://www.nytimes.com/2008/09/28/magazine/28wwln-reconsider.html Washington's Invisible Hand] {{webarchive|url=https://web.archive.org/web/20180204124050/http://www.nytimes.com/2008/09/28/magazine/28wwln-reconsider.html |date=2018-02-04 }}, September 26, 2008 ''New York Times''</ref> Former President Barack Obama has stated that GLBA led to deregulation that, among other things, allowed for the creation of giant financial supermarkets that could own investment banks, commercial banks and insurance firms, something banned since the Great Depression. Its passage, critics also say, cleared the way for companies that were [[Too big to fail|too big and intertwined to fail]].<ref>[https://www.wsj.com/articles/SB123665023774979341 Ten Questions for Those Fixing the Financial Mess] {{webarchive|url=https://web.archive.org/web/20150922003025/http://www.wsj.com/articles/SB123665023774979341 |date=2015-09-22 }}. ''Wall Street Journal''. March 10, 2009.</ref>

Economist [[Joseph Stiglitz]] has also argued that the Act increased risk-taking leading up to the crisis, stating "the culture of investment banks was conveyed to commercial banks and everyone got involved in the high-risk gambling mentality".<ref>[https://abcnews.go.com/print?id=5835269 Who's Whining Now? Gramm Slammed By Economists] {{webarchive|url=http://archive.wikiwix.com/cache/20110805141550/https://abcnews.go.com/print?id=5835269 |date=2011-08-05 }}. [[ABC News (United States)|ABC News]]. Sept. 19, 2008.</ref> In an article in ''[[The Nation]]'', Mark Sumner asserted that the Gramm–Leach–Bliley Act was responsible for the creation of entities that took on more risk due to their being considered "[[too big to fail]]".<ref>[http://www.thenation.com/article/john-mccain-crisis-enabler Sumner, Mark – John McCain: Crisis Enabler] {{webarchive|url=https://web.archive.org/web/20101125153425/http://www.thenation.com/article/john-mccain-crisis-enabler |date=2010-11-25 }}. ''[[The Nation]]''. September 21, 2008.</ref>