August 4, 2009/1

News reports today suggest that the strain is starting to tell on Geithner. It's understandable: the evolving regulatory structure will inevitably involve a lot of turf-protecting and a lot of turf-building. Personally, I think the notion of a single, uber-regulator is ludicrous. I am opposed to anything that makes lobbyists' work easier, and this will effectively permit one-stop shopping for K-Street. Here again, why is history being ignored? When banking and investment banking (for lack of a better word) were separated and kept separate (1933-99) by Glass-Steagall, and the two sides were separately regulated, Wall Street's ability to plunge the nation into systemic disaster was limited: the dot-com bubble was about as bad as it got. This economy runs on two energy sources: fossil fuel and credit. The pricing of the latter has been outside our control since 1973, when we failed to take steps to counter OPEC, and the repeal of Glass-Steagall effectively terminated our control of the latter. In both sectors, the principal agents of waste, the auto companies with their SUVs, and Wall Street with its securitizations and derivatives, ran wild and here we are. Why not go back to where we were?