The challenge is not to paper over or tinker around the edges of the broken system. We need to minimize the danger that the uncertainties and risks inherent in the functioning of a market-based financial system do not again jeopardize the functioning and foundation of our economy.
Actually, the challenge is to lock up the malefactors, liars and thieves, of which there have been and are many.
What would be the bank robbery rate were there no penalty for robbing banks? You need look no further than the so-called "regulatory framework" for the source of the problem - The Federal Reserve Act, the enabling legislation for the OTS and OCC, "Prompt Corrective Action" - all of these are great-sounding lawsbut none of them contain the critical clause in any law if you expect people to follow it: an "or else."
I particularly welcome the strong reaffirmation of one long-standing principle – the separation of banking from commerce – that has long characterized the American approach toward financial regulation.
The repeal of Glass-Steagall dropped the last pretense of any such thing - a law that had been wantonly and notoriously violated by the merger of Citibank and Travelers and which was clearly unlawful at the time it was contemplated and entered into. Instead of swiftly applying a boot to the head of both Boards of Directors and the Chairmen of both firms the law was instead changed to make retroactively legal that which was a blatant violation of United States Law.
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