I agree with your premise, and I'd add to it the governmental efforts that interfere with correcting the bubble, such as the Obama administration's work to prop up home prices.
However, it's not true that Glass-Steagall contributed to the economic crisis. If anything, it served to mitigate the problem. I think the argument here [1] is pretty slam-dunk:
<quote>
The 1933 Glass-Steagal Act [] prohibited commercial banks from owning investment banks ...
Just look at which organization’s have failed:
* Bear Stearns was an investment bank before it was sold to JP Morgan Chase (which includes a commercial bank).
* Fannie Mae were Freddie Mac were government sponsored entities before the government bought them.
* Lehman Brothers was an investment bank before it want bankrupt.
* Merrill Lynch was an investment bank befor it was sold to Bank of America (which is a commercial bank).
* AIG is an insurance company with no commercial banking division.
Remember, Glass-Steagal was passed to protect commercial banks from failure by forbidding them from investment bank practices like trading in securities and underwriting stocks and bonds. As you can see above non of the failed institutions are commercial banks that got in trouble through risky investment banking. Instead, it is the commercial banks that are providing some stability to the system by purchasing troubled investment banks.
However, it's not true that Glass-Steagall contributed to the economic crisis. If anything, it served to mitigate the problem. I think the argument here [1] is pretty slam-dunk:
<quote>
The 1933 Glass-Steagal Act [] prohibited commercial banks from owning investment banks ...
Just look at which organization’s have failed:
* Bear Stearns was an investment bank before it was sold to JP Morgan Chase (which includes a commercial bank).
* Fannie Mae were Freddie Mac were government sponsored entities before the government bought them.
* Lehman Brothers was an investment bank before it want bankrupt.
* Merrill Lynch was an investment bank befor it was sold to Bank of America (which is a commercial bank).
* AIG is an insurance company with no commercial banking division.
Remember, Glass-Steagal was passed to protect commercial banks from failure by forbidding them from investment bank practices like trading in securities and underwriting stocks and bonds. As you can see above non of the failed institutions are commercial banks that got in trouble through risky investment banking. Instead, it is the commercial banks that are providing some stability to the system by purchasing troubled investment banks.
</quote>
[1] http://blog.heritage.org/2008/09/22/the-glass-steagall-myth/