Re the second point
It limited the amount of risk commercial banks could take on. By not being able to take on the risks that investment banks can and often do, the commercial banking industry would be more stable and less likely to require bailouts (especially those subject to the FDIC) In other words it was a firewall to prevent commercial banks putting the general populations savings at high risk
People put their money into BoA for safety, people put their money into Goldman to make a lot of money. By allowing BoA to act like Goldman, the safe place to put ones money was gone
Totally agree. Depositing one's money for safekeeping is a totally separate consumer activity than investing in stocks or bonds. In the former case, the deposit account acts as a secure extension of one's wallet and doesn't represent the acquisition of a financial instrument. The latter involves risking one's capital in a financial instrument, and is in essence a business venture.
The problem we have in our banking system is that when I deposit my money for safekeeping in my demand deposit account the bank embezzles my money and invests it as if it were its own. Yet the bank assures me that I continue to be the owner of my funds, and that I may withdraw them or use them to pay my rent at any time, when in fact the bank has taken my money and put it into God knows what investment.
It is impossible for two different people to simultaneously be the owner of the same asset. Either I own my deposited rend and grocery money, or the person to whom the bank has loaned it is the owner, but we cannot both be at the same time. The bank is creating a legally and economically untenable situation by taking what I supposedly own and loaning it to another entity. The same money is an asset on two people's balance sheets. Can you say financial bubble?
So I see how Glass-Steagall is an attempt to limit the level of risk I am placed under when the bank embezzles my money. For example, the bank loaning my deposited rent and grocery money to a local business is a good thing, while investing my rent and grocery money in a financial instrument is a bad thing. But that doesn't solve the underlying problem. If I deposit my rent and grocery money in a bank for safekeeping, and the bank takes my money, money I legally own and may withdraw at any time, and they use it for their own money-making investments, then they ought to be charged with embezzlement.
If I as a consumer wish to risk my money investing in equities, bonds, certificates of deposit, or any other business venture, then I am perfectly free to assess the risks, make the investment, and live with the profit or loss involved in my business decisions.
However, if I should also be able to choose to simply to keep my money in a secure facility and use that money to pay my rent and groceries. The depository institution should be required to hold every penny of my money in my account at all times for my immediate withdrawal, and as the legal bailee, the depository institution should be forbidden from putting my deposit at risk by embezzling my money and using it for their own business ventures.
That is the only way to prevent bank failures from impacting depositors. Glass-Steagall is just nibbling around the edges, because even supposedly safe business and farm loans can and have gone bad, wiping out depositors.