Reinstate tougher rules on bankers

— Aggressive re-regulation of U.S. banks is about three financial crises and one near-economic meltdown overdue.

Legislation passed by the House last weekis a start, but did not go nearly far enough.

A basic task is to once again separate investment banking from consumer banking because of the grievous loopholes that have U.S. taxpayers bailing out banks for all manner of risky investments. The government is even providing the low-interest loans for the speculation.

Instead of debating whether banks and financial institutions can be too big to fail, reimposethe rules embodied in the 1933 Glass-Steagall banking act that protected the nation’s financial infrastructure for the next half century.

Credit-rating agencies that sold their endorsements to the highest bidders would get tocontinue their fee-for-fibs business, a line of work that competes with the world’s oldest profession.

All of this has to pass the Senate, which means there is still ample opportunity for stalling, watering down, obfuscation and campaign fundraising.

Regulating commercial banks is a matter of reimposing rules, regulations and reserves. Let the investment bankers gamble their own money in isolation, away from government-backed assets and taxpayer risk.

Editorial, Pages 14 on 12/21/2009

Upcoming Events