The S&Ls were dead/dying before the deregulation we did in the 1980s. Quite literally dead. Of course, the actions made them worse anyway, also a lot of the toxic liabilities the S&Ls had on their books from the 1970s became backstopped on the federal balance sheet, and the kind of funny thing is that the original S&L plan (not the later liquidation) is relatively similar to Geithner's plan now. So, his comparison is not really that accurate.
But he was quite correct on what Glass-Steagall did - it insulated commercial banks from taking on unnecessary risks - that was the province of the investment bank. That, in addition to other things, like leverage limits, made the banking system stable.
Anyways, I agree (and have agreed for a while now) that Glass-Steagall must be reinstated (so does Volcker).
So, how come it won't happen now - look who runs things...
