In the year since the collapse of Lehman, the phrase “a new Glass-Steagall” has often been used as shorthand. The reference is to regulatory measures that would separate the utility of everyday banking from the casino of financial markets.

The Glass-Steagall Act was a response to the Wall Street excesses of the 1920s. Bankers stuffed their clients with overvalued securities. That pleased the corporate clients who issued the securities but did not please, for very long, the retail clients who received them. Ironically, at the very moment in 1999 at which the Glass-Steagall Act was finally repealed, the New Economy bubble replayed the abuses that had led to the act's passage in the first place.

Serious though the conflict between corporate advice and retail financial services is, it was not at the centre of the credit crunch. That was the result of combining deposit-taking – effectively insured by governments – with speculation by conglomerate banks on their own account. So a “new Glass-Steagall” would not work. Proprietary trading is distinguishable only by its motive and extent from the treasury operations of any well-run deposit-taking institution.