Core PCE inflation remained close to or below 2 percent during both the late-1990s stock market bubble and the mid-2000s housing bubble that led to the financial crisis. Real short- and long-term rates were relatively high in the late 1990s, so financial excess can also arise without a low-rate environment.
But there are several others: In addition to the possibly problematic features of discount window lending in general for the proposal, the Federal Reserve has traditionally opened the window to nondepository institutions only in particularly stressed conditions. Under the Dodd-Frank Act, any use of credit ratings in federal regulations will be prohibited, an obvious complication to the G-M proposal.