The claim about Glass-Steagall is a red herring. The part of Glass-Steagall (the Banking Act of 1933) that was repealed in 1999 under the Bill Clinton administration was the separation between commercial and investment banking. That commercial banks were free to underwrite securities had little to do with the financial crisis. Without Fed driven monetary inflation and credit expansion, banks would not have been able to extend credit into less and less credit worthy lines of investment.
Here’s our own Tom Woods on Glass-Steagall (and note his reference to his book, _Rollback_):
The debt-default claim is scaremongering. If the federal government hit the debt limited, it could still service all of its debt up to the limit. For example, if the limit is $15 trillion and the federal debt rises to $15.1 trillion, then $100 billion of debt would need to be retired to stay within the limit. This could be done by not issuing additional debt to replace the debt that is maturing. Even if the federal government defaulted on the $100 billion, it would not disrupt the entire federal debt market let alone broader financial markets. Even if the federal government defaulted on all its debt, it would help, not hurt, broader financial markets. It would free up capital funding for entrepreneurs. It would have no particular effect on the dollar unless it was a harbinger of a change in monetary policy or money demand.
Here’s Peter Klein on debt default: