Et tu, Bob?

The usually scholarly Robert Gordon of Northwestern was asleep at the fact checking switch in 2009 (thanks to Marcus Nunes in a comment at The Money Illusion);

... much too little emphasis on the role of regulatory failure, which began back in 1999 with the Clinton Administration’s decision to repeal 1930s‐era banking legislation known as the Glass‐Steagall Act that had erected a wall betweencommercial and investment banking. 

Which is simply not true. The 'wall between commercial and investment banking' is still the law (provisions 316 and #21 of the Banking Act of 1933). They were never repealed, contrary to popular belief. It was only the 'affiliations provisions' (#20 and #32) that were repealed, and they had nothing to do with any 'regulatory failure'.

This bit of misinformation from Gordon  is even worse;

Perhaps the most glaring failure, thus far little discussed in the commentary on the financial meltdown, was the absence of Federal regulation requiring stringent down‐payment requirements on residential mortgages.

Of course, the fact that it was Federal regulation virtually demanding the abandonment of stringent down payments--under the guise that they were evidence of racial discrimination--not its absence, is not only well known, but has been discussed extensively. Here and elsewhere.

No one needed to tell lenders that they should have borrowers make 20% down payments--'skin in the game'--in order to get a loan; that was, mostly, a requirement for conventional home loans.  Until the Boston Federal Reserve got into the picture.  Gordon is correct to say;

If 30 percent requirements [as in China] had been regular practice in the U. S., the subprime mortgages never would have existed because low‐income borrowers would not have had the financial resources for such a large down payment. It is reasonable to conjecture that in this hypothetical case the worldwide financial meltdown would not have occurred.

But, it was the existence of Federal regulation, not its absence, that was responsible.