Commercial banks focused on lending (retail and commercial...even commercial paper) and investment banks focused on, well, investment banking (i.e. raising capital in the public and private capital markets).
Occasionally an investment bank would bite the dust...but at least its investors were well aware of the risk. And the Commercial banks were much more conservative...as they should be.
Yep, exactly.
I worked for a Commercial Bank when Glass Stegall was repealed. I thought it worked ok. At least when the investment banks went down, they didn’t take the whole system with them.
That’s awesome, but investment banking didn’t cause the crisis. Glass-Steagall didn’t prevent bad mortgages. Wouldn’t have prevented the crisis.