I strongly agree with Obama on this. I would like to never have to see a repeat of the "too big to fail" syndrome. It has become clear that certain activities of banks cause them to incur too much risk causing them to fail when the economy takes a dump, and given the central role banks have in shaping the macro economic environment (including the size of the money supply among other things - it goes up when they lend, and down when they don't), those activities need to be separated from lending and any money which has FDIC insurance.
I am sure most would agree with me on this, no?
Not me. I just don't get what a return to Glass-Steagall has to do with the last financial crisis. The entities that were centrally involved - Lehman, Bear Stearns, AIG, etc. - weren't consumer banks. They were investment banks that took on too much risk. The government didn't have to step up at all when the entities failed - and didn't do so for Bear Stearns anyway.
If anything, the repeal of Glass Steagall HELPED because Bank of America wouldn't have been able to absorb Merill Lynch under the old rules.
What Obama is proposing is like treating a virus with penicillin - it sounds like a good idea, but won't work. He's fighting the wrong battle.