“Glass-Steagall” had nothing to do with sub prime mortgages.
Oh, really? Didn't Glass-Steagall (Sec. 20, I believe) keep insurance companies out of banking and vice versa? It would seem that AIG, once a respected insurance company that had some semblance of actuarially sound underwriting, reserving and investments, got itself into a bit of a mess with derivatives tied to sub-prime mortgages. One of many sources: AIG’s sub-prime losses spur federal probe.