As a non-bank, Glass-Steagall doesn't apply to Countrywide either. What Glass-Steagall does apply to are the investment banks that SECURITIZED the subprime loans. Because of the repeal of Glass-Steagall, these investment banks were allowed to merge with large commercial banks, and when these investment banks started buying up all the subprime mortgages issued by Countrywide, they put the entire commercial banking industry at risk.
All of the investment banks that first collapsed ; Bear Stearns, Merill Lynch, Lehmann Brothers, etc never merged with commercial banks. Countrywide would have been able to make the loans without any bank mergers, because there were plenty of investment firms ready to securitize them. Just like they made the loans without the government on their back. Which is why I said we're discussing more tangential factors in the market.