Forward to history

One of the key reforms of the New Deal was to separate the sectors of the financial world. Banks were to engage in banking. Investment banks--the companies that put together financing through stock issues--were to stay in their patch, with stock brokers. Insurance companies (which are huge investors--they make their money not from your premiums but from investing them) were to stick to insurance. In the '80's and '90's, however, wise men told us that such segregation was unnecessary. So, Citibank bought Smith Barney and Chase Bank merged with JP Morgan (frankly, I don't remember which one bought the other).

Well, guess what? History is repeating itself. The run on Bear Stearns last week was especially scary, because the collapse of an investment bank could lead to the collapse of commercial banks, dragging companies down along with the market down, and imperiling financial and industrial institutions.

Tightening regulation of financial institutions is not all that needs to be done, of course. It's hardly a beginning. All across the spectrum of government-business relations, regulatory fences that protected ordinary Americans have been taken down. They need to be rebuilt. In some cases, such as the home mortgage market, new protections need to be erected.

This should be a major issue in the presidential campaign. All of the candidates ought to be asked, frequently and pointedly, what they will do to safeguard the nation's financial health against future excesses like the ones that plague us now.