With Congress already debating a sweeping overhaul of financial regulation, perhaps the most enduring regulatory stricture of the Depression era is again getting an airing in Washington. The venerable Glass-Steagall laws that barred large banks from affiliating with securities firms and engaging in the insurance business were repealed in 1999. Now, as the banks try to move on from the dreaded salary caps and the humiliation of TARP, lawmakers are wondering whether getting rid of Glass-Steagall was such a good idea.

Financial giants such as Goldman Sachs could be broken up under two bills introduced in Congress on Wednesday, one with the backing of former Republican presidential nominee John McCain. Both would reinstate Glass-Steagall. Passage of the Cantwell-McCain bill would force firms at the center of last year’s financial crisis — such as Goldman Sachs, Morgan Stanley, Citigroup, JPMorgan Chase and Wells Fargo — to spin off investment and insurance operations, according to Demos, a progressive think tank in New York. A similar measure was offered on Wednesday by six Democrats in the House of Representatives.

To be fair, many have wondered whether dumping Glass-Steagall was such a good idea. What’s odd is that the discussion about bringing it back comes as almost an afterthought to the massive regulatory reform bill now before Congress. Rather than start from scratch, it may have made more sense to try to reinstate laws that the marketplace was already familiar with, and add new bits around the edges.

While the banks may think they are strong enough to shed TARP, it’s hard to see how they would survive the cleaving of Glass-Steagall at this stage of their recovery. Perhaps by forcing the sector to resplit itself, the remaining banks would be forced to go back on TARP. While that might have some political appeal, analysts say restoring Glass-Steagall is probably a non-starter because it would be seen as stoking unemployment. Going back to more Depression-era regulation would also be difficult to sell as a progressive approach to modern day problems.

Thursday’s highlights:

National Australia Bank made a surprise trump bid for AXA Asia Pacific Holdings’ Australian and New Zealand units on Thursday, in a cash deal that would value all of the target firm at around $12 billion.  The bid tops an offer from Australian life insurer AMP Ltd, which had faced resistance from AXA Asia Pacific’s independent directors who were looking for a higher offer.

Private equity firm Apollo Management said it had agreed to buy Ohio theme-park company Cedar fair for $635 million. The total deal is valued at $2.4 billion including the refinancing of the firm’s outstanding debt.

And in news elsewhere:

Bailed out U.S. insurer American International Group plans to file a prospectus for a multi-billion dollar IPO of its Asian life insurance unit before Christmas, the Financial Times reported on Thursday.  The Hong Kong IPO of American International Assurance is expected to raise $10 billion to $20 billion, the paper said.

Deutsche Bank has emerged as a key bidder for commodities trading company RBS Sempra. RBS said it was selling its 51 per cent stake in the commodities trading company in November, which it jointly owns with Sempra Energy, the FT said.

U.S. automakers claimed four of the six finalist spots North American Car of the Year and North American Truck of the Year as picked by 49 automotive journalists in the United States and Canada.

U.S. automakers Ford Motor Co and General Motors Co each have one truck and one car on the list.

The car finalists are the Buick LaCrosse, the Ford Fusion Hybrid and the Volkswagen Golf.

Chevrolet and Buick are two of the four GM brands the automaker will feature in North America, in addition to Cadillac and GMC.

The truck finalists are the Chevrolet Equinox, the Ford Transit Connect, and the Subaru Outback. The jury of journalists had more than 50 vehicles to choose from, and narrowed the field to 16 cars and 10 trucks before voting to pick the finalists. They will vote again to name the winners, which will be announced at the North American International Auto Show in January in Detroit. New models or ones that have been substantially changed are eligible.

The 2009 Genesis at the Chicago Auto Show last February, weeks after it was named North American Car of the Year. (Reuters Photo by John Gress.)

Last year, the winners were Hyundai Motor Co’s Genesis for the cars and the Ford F-150 for trucks.

This year, the other nominees for the car category were BMW 335d, Cadillac CTS Sport Wagon, Chevrolet Camaro, Ford Fusion, Ford Taurus, Honda Insight, Kia Soul, Mazda3, Mercedes-Benz E Class, Porshe Panamera, Subaru Legacy, Suzuki Kizashi, and Toyota Prius.

Nominees for Truck of the Year were Acura ZDX, Audi Q5, Cadillac SRX, Honda Accord Crosstour, Land Rover LR4, Lincoln MKT and Volvo XC60.

U.S. automakers have won the car award eight times, followed by European automakers four times, Japanese automakers three times, and last year’s Korean winner.

In the truck category, U.S. automakers have won 10 times, followed by Japanese manufacturers four times and European companies twice.

The finalists were announced at an Automotive Press Association lunch at the Detroit Athletic Club on Wednesday.

U.S. automakers claimed four of the six finalist spots North American Car of the Year and North American Truck of the Year as picked by 49 automotive journalists in the United States and Canada.

U.S. automakers Ford Motor Co and General Motors Co each have one truck and one car on the list.

The car finalists are the Buick LaCrosse, the Ford Fusion Hybrid and the Volkswagen Golf.

Chevrolet and Buick are two of the four GM brands the automaker will feature in North America, in addition to Cadillac and GMC.

The truck finalists are the Chevrolet Equinox, the Ford Transit Connect, and the Subaru Outback. The jury of journalists had more than 50 vehicles to choose from, and narrowed the field to 16 cars and 10 trucks before voting to pick the finalists. They will vote again to name the winners, which will be announced at the North American International Auto Show in January in Detroit. New models or ones that have been substantially changed are eligible.

The 2009 Genesis at the Chicago Auto Show last February, weeks after it was named North American Car of the Year. (Reuters Photo by John Gress.)

Last year, the winners were Hyundai Motor Co’s Genesis for the cars and the Ford F-150 for trucks.

This year, the other nominees for the car category were BMW 335d, Cadillac CTS Sport Wagon, Chevrolet Camaro, Ford Fusion, Ford Taurus, Honda Insight, Kia Soul, Mazda3, Mercedes-Benz E Class, Porshe Panamera, Subaru Legacy, Suzuki Kizashi, and Toyota Prius.

Nominees for Truck of the Year were Acura ZDX, Audi Q5, Cadillac SRX, Honda Accord Crosstour, Land Rover LR4, Lincoln MKT and Volvo XC60.

U.S. automakers have won the car award eight times, followed by European automakers four times, Japanese automakers three times, and last year’s Korean winner.

In the truck category, U.S. automakers have won 10 times, followed by Japanese manufacturers four times and European companies twice.

The finalists were announced at an Automotive Press Association lunch at the Detroit Athletic Club on Wednesday.

A poll from UBS and the Boston Consulting Group finds a “surprisingly healthy” one in five European companies is likely to make a significant (EUR 500 mln+ in sales) acquisition in 2010. Some of the other key findings:

“Corporates are seeking growth: Strategic and growth-related considerations such as expansion of product offering, access to new geographies and access to new customers and distribution channels were the three most cited drivers of M&A activity, from a choice of 12 drivers.

“Lack of attractive targets and company valuations are main M&A barriers: Lack of attractive targets (cited by 40% of respondents) and, reflecting the speed and extent of stock markets’ recovery, high valuations (cited by 39% of
respondents) were the most commonly cited barriers to M&A.

“Self-imposed financing constraints: Corporates plan to rely on internal financing for deals. 42% of respondents plan to use existing cash reserves or cash flow whilst 23% would use existing debt facilities. Beyond this there is a clear
preference for equity financing (14%) over new bank loans (5%) or traded debt issues (4%). This suggests an upper limit to deal sizes over the next year – consistent with the early stages of other M&A waves.

“Not many mega deals yet: Only 20% of respondents expect a transformational deal in their sector vs. 43% in last year’s survey. This is consistent with (1) a preference for internal funding of deals, (2) product markets not having undergone
the seismic change that many expected a year ago, (3) still relatively moderate risk appetite of senior executives and (4) perceived higher valuations …

“Corporate restructuring outlook: Restructuring expectations are high; 66% of respondents expect more deal-based restructuring in their industry over the next 12 months. “Forced” divestitures and voluntary sales of underperforming
businesses are expected to feature heavily (29% of respondents each).

“Shareholder activism: A significant majority (75%) of respondents expect more pressure from investors, banks and other creditors to conduct more deal-based restructuring in their sectors.

“Return of Private Equity: Higher financial investor involvement is expected, although more as sellers (cited by 54% of respondents) than as buyers (36% of respondents).”

In a linked note, UBS’s “special situations” team also names its top picks for European M&A: Aegis, Basilea, C&C, Croda, Kloeckner, Meggitt, Peugeot, Sonaecom, and Temenos.