Like most of the stuff on PBS, this is a pretty bogus account. Glass-Steagall was arcane, useless, and placed our financial organizations at a disadvantage with international firms that had no such restriction.
It seems to me to be an effort to misdirect blame on “de-regulation” rather than where it belongs - regulation.
The reason that derivatives of high risk mortgage backed investments existed was because lenders that were “regulated” into making high risk loans sought ways to spread the risk into packaged securities.
Fannie and Freddie effectively laundered the derivatives by buying them and re-selling them as US GOVT SECURITIES with the implied backing of the US Federal Government. These Fannie and Freddie securities were NEVER off limits for consumer bank investment, and in fact were encouraged by the Fed rules which allowed them to be held as a “cash equivalent” when determining liquidity qualifications.
Citing the repeal of Glass-Steagall as a major factor in the financial meltdown is a smoke screen, and trying to tag Bill Clinton with it is just a way to sound “non-partisan” while pushing for higher regulation and further intrusion into the private sector.
How are those international firms that had no such restrictions doing now? Just saying. It wasn't just a potential collapse because of US banks, but it was the global banking industry in crisis. How many billions of American taxpayer money (borrowed from China) went to foreign banks when the Fed bailed out AIG - perhaps hundreds of billions?
Glass Steagall may have needed some updating, and it's silly to argue that is solely or centrally responsible for our current condition. But, it's also a stretch to assert that it doesn't bear some responsibility for the mess we're in.
It's tough to be the CEO of a bank that doesn't get into riskier lending, and still pay yourself $30-50 million in bonus and salary. Borrowing at 3% and lending at 5% doesn't pay that well. The repeal of Glass-Steagall didn't strengthen America's banks, nor did it help bank shareholders - it just lined the pockets of some very well-educated Wall streeters.
There's a case to be made that private equity firms - firms that don't borrow from the government, nor have their depositor's accounts insured by the FDIC - should be virtually free of regulation. But banks, that feed frequently at the trough of government largess need to have some robust adult supervision.