By Barry Ritholtz, The Big Picture
“Excessive regulation in the banking reform bill will destroy a substantial part of our bond-distributing machinery. Can anyone expect that a step of this kind will improve the quality of our long-term investments?”
-President of the American Bankers Association
In case you missed it, Joe Nocera had an outstanding column in Saturday’s NYT. It began with that quote above, circa January 1933. Yes, the banking industry has been railing about regulation for nearly a century. What they really want is to have it both ways — as little regulation as possible, but Taxpayer Bailouts there when they periodically blow themselves up.
But the heart of Nocera’s column discusses how unique the Glass Steagall act was, changing the banking environment form one of speculation (and massive depositor losses) to a boring, modestly profitable, cornerstone of the national economy.
What made it possible was the focused public ire on bankers, mostly due to the Pecora Commisssion.
“There was surprisingly little controversy over what we now think of as [Glass Steagall] law’s primary achievement: splitting commercial and investment banking. The fights were all over issues that seem inconsequential by today’s lights. It’s as if the notion of breaking the banking business into two was always a foregone conclusion…."
Fascinating stuff.
But it points out an enormous series of errors from newly elected President Obama — from appointing the status quo duo (Geithner and Summers) to letting the guilty parties off the hook. He should have been hammering away at the miscreants who caused the crisis, instead of continuing George W. Bush’s socialist bailouts of the banks…
Full article here: The Missed Opportunity to Reform Reckless Banking | The Big Picture.
