Written by: Nick Caleb
Researched by: Casey E. Sanders
Edited by: Stefanie Herrington, Daniel Kwak, and Eric Blaine
Managing Editor: Amy E. Seely
ATTENTION:Â The final buzzer may have just sounded on the Wall Street Era.
The global marketplace is in the midst of a serious financial crisis of which the effects are in no way limited to American International Group (AIG). Alan Greenspan, former chairman of the federal reserve, says that the economy is the worst he’s ever seen. In addition, economic experts agree that a quick fix is needed to stave off complete economic collapse. In the next few days and weeks, there will 
be an intense policy debate that could shape the face of the market for decades to come. To reconstruct the mechanisms that led to this crisis, one need only revisit a bit of recent regulatory history.
One of the changes in the law that contributed to the current crisis was the 1999 repeal of the Glass-Steagall Act, which was enacted after the 1929 stock market crash. In short, the Act banned banks, insurance companies, and brokerage firms from teaming up. This legal barrier protected bank depositors from the higher risks associated with security transactions (those involving stocks, bonds, and derivatives), instead of making traditional, safer investments with the best interests of depositors in mind. As Slate Magazine explains, “in the 1920s commercial banks (the types that took deposits, made construction loans, etc.) recklessly plunged into the bull market, making margin loans, underwriting new issues and investment pools, and trading stocks. When the bubble burst in 1929, exposure to Wall Street helped drag down the commercial banks.” After twenty-five years of unsuccessful attempts to repeal the law, the 1998 Citicorp and Travelers merger (resulting in Citigroup) finally persuaded the U.S. government to remove Glass-Steagall from the books.
When Glass-Steagall was repealed, commercial and investment banks became intimately reacquainted, bringing back the conflict of interest that existed before the Great Crash. In fact, today many banks own brokerage firms and provide investment services. The repeal was a green light for commercial banks to re-enter the high-risk securities markets. On the advice of financial advisors, government regulation was reduced mainly to “private counterparty surveillance” and “oversight of process,” while commercial banks were re-exposed to Wall Street in a big way.
As Wall St. looked to best exploit the situation, securitization of debt became a major trend. Essentially, any leased property, residential mortgages, home equity loans, student loans, credit card debts, and other debts can be “bundled” into asset-backed bonds which can be traded like any other stock or bond. Banks began to issue mortgage loans and then sell the promise of repayment to another larger institution (like an international investment bank, hedge fund, private equity fund, etc.). The larger institution would combine many of these mortgages (or other forms of debt) into a “bundle” and then use the promise of its future repayment as collateral for a loan–from yet another institution–that would finance a merger or corporate restructuring effort.
Widespread securitization, combined with risky lending and borrowing, an inability of homeowners to make mortgage payments, and extremely low interest rates from the Federal Reserve gave rise to the subprime mortgage crisis.
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payment for quoting its article, and the 
The Ladies Professional Golf Association (LPGA), perhaps subscribing to the theory that any publicity is good publicity, 