Tornado Alley (PROG)

[BullNBear52]

Well you got me on that one. Or at least the first article.

Banks should be allowed to underwrite securities as long as the activities were conducted by a subsidiary of the bank's parent holding company and not directly by the bank, said ...

His caveat being that a firewall still had to be maintained between the bank and the investment bank / underwriter.

So far so good. No bank has yet failed due to the stupidity of the investment side and although a few have had to go chase capital Citi etc; the Fed has managed to insure that capital requirements are maintained on the banking side.

Do I think he was wrong to recommend it's repeal. Yes. But U.S. banks were operating on an unequal playing ground compared to their foreign competitors.

The Fed’s intervention highlights the problems regulators face as they contemplate the prospect that investment banks, saddled with toxic securities tied to subprime mortgages, are losing the trust of their lenders and clients — the kiss of death on Wall Street, where confidence has always been the most precious asset of all.

Traditionally regulators have helped commercial banks in financial panics, but not investment banks, which do not hold customer deposits. But the 1999 repeal of the Glass-Steagall Act, the Depression-era law that separated investment banks and commercial banks, led to consolidation within the financial industry that has made such distinctions harder to make.

“I don’t remember a Fed action aimed at a noncommercial bank; this is the kind of thing you see in this post-regulatory environment,” said Charles Geisst, a Wall Street historian at Manhattan College.

http://www.nytimes.com/2008/03/15/business/15bear.html?ref=business

Can you blame Greenspan for the sins of Wall Street?