The banking industry is not like other businesses. When the banking industry fails it seriously damages an economy, what economist’s call external effects. People who had nothing to do with banks suffer and the national economy suffers. The
learned this lesson the hard way in the 1930’s, but it did learn the lesson and
instituted banking reform and regulation that protected the U. S. economy until, well until the
nation forgot the lesson.
All of this has led the head of the European Central Bank, Mario Draghi to propose stronger banking regulation for
As the first possible step for a more unified euro zone, Mr. Draghi called for "a banking union," entailing a euro-zone level fund for resolving failed banks, a euro-zone level deposit insurance guarantee scheme, and banking-sector supervision that is more centralized on a European level.
This is, of course, what the
has, or is supposed to have. It is what
we had after the Great Depression. But
then everyone believed the bankers when they said they had learned their
lessons, and the Federal Reserve in particular under Alan Greenspan essentially
abrogated its regulatory responsibility.
It left regulation to the ‘market’, and we all know how that turned out.
If Republicans take control of the U. S. government then removal of bank regulation and oversight will accelerate. The impact will not be immediate, but it will come eventually and it will be harsh. This will prompt the leaders of that future generation to ask the inevitable question, “What was wrong with you people?” which will lead to the inevitable answer, “greed and stupidity, what did you think was wrong with us”.