Well I wrote all this gobbledygook but I ' m going to replace it with this . Glass Steagall was nullifed slowly over many years by the way the Fed interpreted the law over the years . Not only was this or that deregulatory law passed over the years there was also fed policy changes that more or less amounted to a relaxing of the interpretation of Glass Steagal and other regulations . What these people could not accomplish by law , they did by defunding regulatory agencies and installing finance sector friendly leaders . This direction of policy was fueled by the people I mention . Greenspan himself was giving policy speeches constantly mentioning self regulating markets and hands off regulation and similar remarks . You have the issue of shadow banking and derivatives . Both of them used to manipulate the amount of and value of what is on your books . Both of them largely unregulated . Even today . You said AIG was unaffected by these repeals to glass steagall , yet they had their own AIG Financial Products division where they sold credit default swaps . $ 30 billion in losses at the time of the crisis and largely the reason they needed to be bailed out . To me it ' s just a safe regulated entity combined with a unsafe unregulated entity . You could argue that it ' s an insurance product yet . obviously they didn ' t have the capital to back up the claims . So it ' s not really insurance is it . Also they bought a bank to help run this division I believe . Brooksley Born even wanted to regulate derivatives and was shot down by Greenspan and Co . That is just how the culture was at the time . They complain of regulation but here are a couple of examples of more or less unregulated finance entities . b a nksubsidiarybankingsystem . aspSorry I did my best . Last issue is , if these big mega banks never came into existence , who is to say that the fallout would have ever gotten so large ? I really think the losses from these bad loans would have been much smaller . I don ' t think it would have been a too big to fail situation . Maybe .