NEW YORK CITY—In his most recent post, Ethan Penner looks at the history of securitzation and how the death of the Glass-Steagall and the Investment Banks are undercutting the health of the capital markets.
Securitization had a revolutionary impact on the world of finance, Penner reminds. So much so that it began a shift away from Savings & Loans and Savings Banks in the 1980s. In fact, says Penner, the big winners were the Investment Banks that were able to capitalize on securitization in a way that more traditional banks, hampered by Glass-Steagall, could not.
This led to a contentious campaign to discredit the Investment Banks, to the eventual overturning of the depression era bill, to habits in the industry that still continue today. Was it as detrimental as traditional banks framed it?