Wall Street: A Failure To Regulate

So argues David Lightman for McClatchy in a wire story this morning:

No one cog in the federal government's machine of financial regulation let down the country by failing to prevent the latest shakeout on Wall Street. The entire system did.

Lightman notes that after the Great Depression, Congress instituted walls between banks, securities firms, and insurance companies. Those walls began to crumble after Ronald Reagan assumed the Presidency and continued to crumble despite the $200 billion savings and loan bail-out. Bill Clinton signed the "Financial Services Modernization Act" in 1999, which completely removed the "walls separating banks, security firms and insurers."

US Economy Guide Kimberly Amadeo argues that something like the Great Depression could not happen again because the Fed is smarter. However, it's not the Fed that's shoring up bad loans held by Fannie Mae and Freddie Mac: it's me and you, US taxpayers.