Repeal of Glass-Steagall (1999)

The Repeal of Glass-Steagall (1999) is the single worst regulatory failure in modern finance because it legalized a conflict of interest that killed the 2008 economy. The Gramm-Leach-Bliley Act tore down the wall between commercial and investment banking, enabling megabanks to gamble with depositor money on unregulated derivatives. By 2007, the five largest U.S. banks held 43% of all banking assets, up from 17% in 1995—a concentration that directly fueled the subprime crash. Unlike vague loopholes in other rules, this repeal created a permanent too-big-to-fail structure that required $700 billion in taxpayer bailouts.