U.S. Treasury Secretary Timothy F. Geithner said the repeal of Glass-Steagall, the Depression-era law separating deposit-taking institutions from investment banking, didn’t play “a material role in the causes of our financial crisis.”
“I know that view is not widely accepted in many places,” Geithner said in response to a question after a speech in San Francisco today. Geithner, 50, was president of the Federal Reserve Bank of New York during the 2008 financial crisis and became Treasury secretary the next year under President Barack Obama.
“A huge amount of risk built up outside our banking system, outside the safeguards and protections we put in place in the Great Depression,” Geithner said. “That risk and leverage grew up, built up, very substantially, and when the storm hit it put enormous pressure on a part of the system that provided about half the credit to the American economy. Nothing to do with Glass Steagall.”
Glass-Steagall was repealed in 1999.
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