Barry, My Liege :
The United States of America in which most of the population lives has learned a lesson. We have learnt this clearly and absolutely ; we know it as well as we know our names.
The lesson is this : Bankers will not consider the effects of their actions on other parties. They have proven repeatedly that they act as if they are in a vacuum. They take no responsibility for any harm they cause.
Banks caused the recent economic meltdown ; they will cause future recessions and depressions unless they are restrained.
From that lesson it follows that the government of the United States has the responsibility to protect the population from bank practices.
However, My Liege, we have the distinct impression that the bank lobby has corrupted the political and regulatory processes thoroughly.
This is the source of our discontent.
Once in our history after great misery and social malaise, we created a bank regulation process that protected the population.
This group of laws was passed in the 1930's. These laws were based on the assumption that banks cannot be trusted to act in the public interest.
These laws were successful in providing a stable financial system for half a century. During this stable period, we enjoyed great prosperity. The laws were extensive and punitive.
The basis of the system was the Glass-Steagall act which prohibited a commercial bank from buying or selling stocks or insurance. Commercial banks are banks which take deposits and make loans.
Some of the other laws are listed below.
The Federal Deposit Insurance Corporation [FDIC] was created to insure the safety of commercial bank depositor's accounts. When a bank failed, the FDIC paid off the depositors, but allowed bank owners to lose their investment.
Investment banks were created to make investments in stocks and other instruments. They were allowed to fail and there was no insurance to protect the owners or investors.
The Securities and Exchange Commission [SEC] was created to protect investors from criminal stock promoters.
All companies which took deposits and/or made loans were regulated ; there were no unregulated financial institutions.
Savings and thrift institutions were regulated so that they could take deposits, but were allowed to make loans on residential real estate only. They were not allowed to issue checking accounts.
Insurance companies could not trade in stocks, make loans or take demand deposits.
The Federal Reserve Bank established limits on interest rates that could be charged to borrowers and paid to depositors by banks. The FED also examined banks carefully to ensure their loan portfolios were sound and the managers were capable. And, the FED established and enforced capitalization ratios to ensure that banks would stay sound during hard times.
My Liege, this is only an introduction to the concept of ensuring the financial stability of the United States of America.
You will note that all the listed laws, and the array of acts, laws and statutes not covered here, have as their common foundation a simple idea.
That common foundation is this : banks cannot be trusted.
We pray you will adopt that foundation, for we fear we are doomed unless you do.
The article in this link provides evidence of criminal bank behavior : http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620
Your faithful servant,