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.
Those investment banks weren't the reason for TARP now, were they? Banks like BofA, Citigroup, JP Morgan Chase were, and they all have investment banking arms. Nice try though.
And Countrywide doesn't belong in a conversation about Glass-Steagall. Countrywide was neither a bank nor an investment bank. Countrywide was a loan originator, and its part in the financial crisis debunks the myth that government mandate to issue loans to low-income borrowers was the cause of the crisis.
Again, you're conflating two completely separate things.