But it has, and since the column refutes what is probably the most repeated claim about the mortgage meltdown by foes of the free economy, it deserves attention.

The Glass-Steagall Banking Act, passed in 1933, was part of the Depression-era flood of federal regulations. Among its provisions was the creation of the Federal Deposit Insurance Act. This was actually a way of getting banks to become part of the Federal Reserve System since the deposit insurance it created gave member banks a competitive advantage over uninsured banks. It also provides a classic example of the counter-productivity of the regulatory mindset. FDIC insurance made customers virtually indifferent to the risks banks take with their deposits. What difference does it make how prudently a bank manages its portfolio, if the Federal government is guaranteeing its deposits?

Glass-Steagall also limited commercial banks from activities in the securities business. This separation of commercial banking from investment banking was repealed in 1999 in a bill signed by President Clinton.