Friday, January 22, 2010
President Obama Gets It, And Now The Banks Will Too
It appears that President Obama has seen the light. Paul Volcker and those that we might consider in his camp for tougher banking regulations, have made a dent in the Summers/Geithner philosophy of deregulation.
As I have written too many times over the last two years, this stuff, money and banking, is not difficult to understand. And, it appears that President Obama has finally gotten it. How bright does one have to be to understand that running a banking operation out the front door and a trading operation out the back door leaves a bank at too much risk. But, when the risk is shifted to the shareholders, senior management feels no pain or for that matter accountability for the losses that mount up as a result of the trading operation.
Let us have commercial banks do what commercial banks do best. Take in deposits and make loans, and where they can charge fees for services provided. Investment bankers should go back to being partnerships and stop using shareholders for capital to trade on. That is my opinion. Too big to fail is totally unacceptable by any standard, but it will take more than the U.S. Congress to make that point stick.
I believe in capitalism and I believe in the NFL, and I know that neither can function without the proper rules and enforcement. For my simple mind, it is just that simple.