I Agree With Elizabeth Warren

..... for perhaps the one and only time.  

Warren aims to reinstate the Glass-Steagall Act, repealed as a joint enterprise of former President Bill Clinton, former Fed Chairman Alan Greenspan, former Clinton Treasury Secretary and Obama economic adviser Lawrence Summers and former Senator Phil Gramm, Republican of Texas.  Chuck Shumer, a Senate Democrat from New York, was a huge repeal supporter. Bob Rubin, Clinton's former Treasury Secretary, represented the private sector. Timmy Geithner, Obama's former Treasury Secretary, was on the team.  The repeal effort was one of those collaborative enterprises that demonstrates why you are dumb to be a Republican and positively insane to be a Democrat.  You really don't want these hicks agreeing and compromising on anything important.

Sen. Elizabeth Warren (D-Mass.) is gearing up for some "financial rabble-rousing," said Kevin Roose at New York. Last week, she introduced a bill that would force big banks to split apart their commercial and investment banking operations. Dubbed the "21st Century Glass-Steagall Act" because it reinstates key provisions of the repealed 1933 Glass-Steagall Act, the bill aims to "make the entire banking system safer and less crisis-prone" by shrinking big banks and making it harder for those with federally insured deposits to engage in "risky stuff."

Warren proposes structural regulation. Glass-Steagall is the type of regulation that actually works over the long haul, because unlike other types of regulation, it doesn't rely on clueless drone bureaucrats to be brave, smart and insightful and doesn't require groveling political appointees to be public spirited. Structurally, you can do x and not do y or you can do y and not do x. Make your choice and go to it. But banks could not be commercial banks and investment banks in one big ball of wax. Glass-Steagall worked for 65 years. It's no wonder.

When I heard that Glass Steagall was repealed I said "Oh my God, now Wall Street will become a gigantic conflict of interest." It will become all about financial gaming instead of operating a financial system that tracks and supports a real economy. Looking back we all know now what gaming took place, and how when those games collapsed in on themselves, they brought the financial sector to its knees, and the real economy along with it.

For economic and financial systems to work well, the dominant form of enterprise has to be informed arms length transactions among people and firms reconciling their various interests. That doesn't happen when the financial chain of events are linked together under a single roof. Our economy needs the Wild, Wild West of Investment Banking. It needs also the safety, security and predictability of plain vanilla Commercial Banking. But we are poorly served, in the extreme, when these functions all occur under one roof.

I agree with Elizabeth. Now I need to go wash my hands.