Moron Poker Challenge

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Over on D-Squared Digest, Daniel Davies challenges all comers to a round of "moron poker," wherein the participants "on-up" each other with links to the bottom stories of the day- the more daft, the better. We think it should be called "Moron Hearts" instead, technically, but, ok, we're game. We are certainly (and proudly) the Street's clearing house for all things moronic.
His lead is with this piece by Alice Miles on subprime. Following the rules, we'll cite this piece over on The Consumerist, previously seen in our very own "write-offs," insisting that the repeal of Glass-Steagall is responsible for all our subprime woes.

We would normally ask you to ignore the fact that the central tenant of the Consumerist piece is just plain false, (or point out that it's just a rehash of Robert Kuttner's argument with a more limited vocabulary) but this is exactly what makes the piece a "moron poker" winner.
Separating commercial and investment banking would hardly stop consolidation (Citi and Travelers were joined before the act "died," for instance. It hasn't technically been "repealed." Regulation Q and FDIC remain, for example.) or prevent a commercial bank from making moronic loans. It helps to notice that Countrywide would have been quite Glass-Steagall compliant without much changing their behavior. No one seems to invoke Banker's Trust in the discussion either. Most big investment banks have their commercial operations dwarfed by their investing activities. The original goal, to insulate cash-depositors from investment risk, is far better served by the FDIC than discouraging investment in favor of cash savings. Finally, commercial banks aren't the problem in this crisis at all.
What Glass-Steagall would do is make it near impossible to inject liquidity into Countrywide, Bear Stearns, or any other failing institution- subprime related or not. Do proponents of such things (Keynesians) suggest we simply ban securitization? Who knows.
Who's For A Game Of Moron Poker [D-Squared]

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