Steven Jobs and Steven Chu

And leaving it with savers was an improvement? Seriously?

You might favor the "Standard Bank" proposal (mine) which goes like this.

1. Standard banks follow rules so simple they can be done entirely by computer. As much human judgement and action as possible is squeezed out of them.

2. Standard banks are explicitly prohibited from engaging in innovation of any sort. Any standard bank found to be NOT Boring is subject to immediate dissolution. Standard banks are non-profit.

3. Only a standard bank can foreclose on any real estate debt, and only for 75% of the purchase price.

4. All payroll checks are required to be drawn on a standard bank.

Various other rules to assure funding, ensure fair treatment of consumers, and so on.

So rather than trying to split banking and investment banking, the idea is to split out mortgages, most checking accounts, other mundane keep life going stuff, from everything else.

i think its astounding how the US went from a country who helped develop nuclear power to completely abandoning it altogether. instead we are spending money trying to make renewable energy sources competitive with fossil fuels, which is a joke in of itself.

meanwhile, the Chinese government has already sent envoys to visit Oak Ridge who then examined all the data we accumulated on Molten Salt Reactors (MSR) and Liquid Fluoride Thorium Reactors (LFTR). and they publicly announced they will begin projects based on the research. and 10-15 years from now, when the Chinese are selling their own versions of the reactors around the globe, which will displace coal as the primary source of electricity in the world, everyone will ask why the US didnt get involved. even though the answer will be obvious to anyone who isnt a partisan hack - bureaucracy.

Bryan Willman: You might favor the "Standard Bank" proposal (mine) which goes like this.

This strikes me as dangerous for at least two reasons.

First, your plan would impose homogeneity on the banking system, which means that any flaw in the rules could potentially leave the whole system vulnerable to catastrophic collapse.

Rule-makers worried about this potential would probably respond by making the rules much more complicated than you envision, in an attempt to patch all possible holes. That would open up opportunities for gaming the system.

Over the long term, your deliberate suppression of innovation in the banking system would likely leave it obsolete as the economy evolves, possibly to the extent that it became a serious drag on economic growth.

Lord: And leaving it with savers was an improvement? Seriously?

This may be more practical than you think. After all, there are many examples of industries which are regulated primarily by their customers... and these tend to be the successful ones.

You might argue that an individual banking customer has no insight into the stability, or lack of stability, of a particular bank. But big institutional savers with the resources and the clout might serve as guides. And numerous small savers could band together, e.g., through private bank-rating firms, do accomplish the same thing.

It seems pretty clear that the current approach of insulating banking customers from risk (and thereby insulating banks from normal market discipline), and then trying to use regulation to fill in the gap, hasn't worked out well.

Let me just say what a wonderful essay that is. Very clearly written and full of great insights. Ultimately though, it is a very depressing one, since I fear the chances of the insights being implemented in any country as very small. People really do crave super-achievers as leaders.