Financial Regulatory Reform

A lot of ink in Washington has been wasted recently mapping out proposed Finanicial Regulatory Reforms to prevent another subprime meltdown. The crux of the issue is not that the reform is desperately needed, but the nonsense being churned out of Washington is nearly worthless, more reflective of a turf battle than meaningful reform.

The first reasonable step should undo any of the changes done to the Glass-Steagull act, a bill that was implemented during the Great Depression to reform banking. Pressured by the banking industry, the Gramm-Leach-Bliley Act of 1999 unwound this earlier bill, allowing the cross-ownership of investment & commercial banks. This absurd change -- which allowed the financial industry to run amok with greed -- is one of the root causes of the current credit crisis.