The repeal of the Glass-Steagall Act was championed by the Clinton Administration. In fact, the repeal could not have become law without Clinton’s signature. Glass-Steagall’s demise is not what created the current crisis. In fact, the recent acquisition of investment banking firms by BANKS is one of the factors ameliorating the situation (e.g. JP Morgan Chase’s acquisition of Bear Sterns; B of A’s announced acquisition of Merrill Lynch; Barclays’ announced purchase of large parts of Lehman Brothers; and Morgan Stanley’s ardent courtship of Wachovia). None of these transactions would have been possible if Glass-Steagall were still in effect.

This crisis has been brought on by easy residential mortgage credit and exotic secondary mortgage market instruments created by investment bankers who are, by and large, Democrats. Lest you forget, Fannie Mae ( a major source of the problem) was run by Franklin Raines, Clinton’s former budget director. He was cooking the books in order to get large bonusues for himself and some of his upper management team (including Jamie Gorelik, former Assistant Attorney General under Clinton). The fraud perpetrated at Fannie Mae by Raines was significantly more deleterious to the U.S. economy than the Enron failure. Yet, no hearings, no trials, no prsion sentences for Raines and his cohorts. In fact, they have been long protected by congressional Democrats, who have been the primary recipients of Fannie Mae political contributions. The top three recipients of Fannie Mae largesse have been Chris Dodd, Hillary Clinton, and Barack Obama. Several years ago, McCain authored legislation to rein in excesses at Fannie Mae, but Barney Frank said the legislation was “unnecessary” and an “overreaction.” Perhaps your next cartoon should address this.

I would say, if we are going down that road, it would be the invention of promissary notes by money lenders, sitting on their bancas (benches, which is where the words ‘bank’ and ‘bankers’ are believed to come from), conveniently eliminating the need to transport large physical amounts of coin that is the ‘one single thing’. A coin is worth it’s weight. But a promissary not is only worth the promisser’s ability to pay it. And shazzam. We have exchange rates, as one banker’s 1 unit note is considered less worthy than another, and people start trading notes at differing rates, and speculating on whether those values may vary. What, 1500’s, 1600’s? Some time around then off the top of my head. Thus, a simple, practical idea sets off a chain of events leading to…

There, that was enlightening. But kind of useless. Still, reductionism is fun, isn’t it?

it would be the Federal Reserve Act of 1913, which made possible the massive credit expansion of the ‘20s, the ‘60s and ‘70s, and the ‘90s and ‘00s (the greatest credit expansion in US history).

Of course, given a broken system (like one controlled by a central bank instead of free markets in money & banking), regulation like this is necessary.

Err… I thought you understood it? So why do you need a study?
Shurely shome mishtake…