Warning: <rant>
Hmm ..., let's see: As I recall, in the 1920s some "unregulated banks" were a major part of the mechanism that caused the US economic boom of the 1920s, the stock market crash of 1929, the banking crisis soon afterward, i.e., runs on the banks, catastrophic shrinking of the money supply, massive price deceases, massive unemployment, bankruptcies, the Great Depression in the US, the US slowing buying from Europe, the Great Depression spreading to Europe, the great economic stress in Germany, the rise of Hitler for a command economy, which actually did get the German economy going again, WWII, the deaths of maybe, what, 50 million people, maybe 100 million, ah, why sweat over few tens of millions of people more or less (right, Marc?), and, then, some really severe laws for the regulation of banks.
We said, "never again will the banks do that to us". Indeed, from now on the banks will be creatures of the US Federal Reserve.
But, in 2008, with not enough regulation, the banks did it to us again. Hurt a lot of people, and we got some more banking regulations. BTW, we are still cleaning up the mess the banks left behind, once again, in 2008.
Paulson, Bernanke, etc. remembered with full clarity and had no doubts: "Your banking regulator is sitting right here, and if you don't take this money you will be declared capital deficient on Monday morning. ... You will not leave here before you sign the paper in front of you." Paulson, Bernanke were just determined, as immediately was Congress, that the US banks would not fail; there would be liquidity; the banks would be well capitalized with plenty of reserves with no doubts; there would not be runs on the banks; AIG could be $85 billion in the hole and cause no problems, etc.
Bernanke was just determined not to be the Fed Chair who presided over the second Great Depression, e.g., from banking regulation failures.
Marc, in the US, we regulate the banks. The US Federal Reserve, etc. has the banks by the short hair, holds on with a tight grip, and just will not let go. Marc, are we learning, now? Are we getting some clarity about banking "regulation"?
In many ways, in social and psychological capital, the US is still recovering from the severe damage and losses of the Great Depression and WWII: People that lived through those years, and many didn't, often suffered horribly and, thus, did some relatively poor parenting, passing on a lot of really strong anxieties and not nearly enough in security, insight, social, psychological, emotional, artistic, and intellectual capital. The anxieties led to stresses led to depression, incapacitation, more stresses, more depression, clinical depression, a huge range of social problems, including some suicides. I know far too much about what I am describing. We're talking big deficits in social and psychological capital passed from parents to children. We have not recovered yet. It appears that full recovery will take a few more generations. E.g., I can believe that a tribe in Brazil that never saw civilized people is generally much happier than people in the civilized countries that went through the Great Depression and WWII. Those tribes have no banks, bubbles, and Great Depressions.
The Great Recession? Still a lot of people are not yet back to work, and that situation is well known to lead to more in abused wives, abused children, alcoholism, drug abuse, crime, infant mortality, divorce, and suicides, little results like those. Marc, you can understand wrecked families, right?
It seems that banking regulation is just crucial unless, of course, we want to kill tens of millions of people a few times each century. Ah, let's don't just mince words, kill a few hundreds of millions of people a few times each century? More? Sure, maybe more! Right, Marc?
Sure, I know; I know; we can agree that the dangers of unregulated banks won't last very long. I mean, that is, don't you see, another WW will mean we no longer need any more banking regulations, or coal, natural gas, oil, cars, houses, plastics, trash pickup, clothes, schools, hospitals, restaurants, smart phones, libraries, the Internet, venture capital firms, venture partners, or people -- there won't be anymore people, puppy dogs, kitty cats, birds, etc.
Gee, "Look, Ma, no more banking regulations! Ma? Ma? Are you there, Ma? Ma, where are you? Ma!!!!"
Thank you Marc. Your knowledge of finance, banking, and economics is showing through with great clarity!!!!!!
Gee, I thought that we were all supposed to understand financial bubbles, the Great Depression, etc. by, what, somewhere in middle school? Marc, did you skip middle school? Maybe you'd want to go back, sit in the front row, and pay attention? And put away your mobile devices.
Unregulated banking? I'd rather give chunks of plutonium to naughty 8 year old boys just to see what they could do with it.
Marc, unregulated banking is the fast way to the end of at least human life on earth. Wouldn't be very good for your deal flow or venture returns either!
Sorry to be so negative: 50 million, maybe 100 million, dead, the suffering of my ancestors and my wife's ancestors who went through the Great Depression and WWII and the Cold War tend to make me a little, just a little, shall we say sensitive on this subject. But, I'd rather be sensitive and negative than silent and dead. Right, it's just my opinion, and YMMV. </rant>