Published: October 31, 2009 04:55 pm      

Other View: Financial reform needed

Last week, Mervyn King, Britain's equivalent of Federal Reserve chairman, delivered a scathing speech calling for radical reform of the British financial system. Among his recommendations: Break up the "too big to fail" banks and separate risk-taking investment banks from meat-and-potatoes commercial banking.

That's hardly Ben Bernanke's view. In fact, the only financial player in Washington who publicly agrees with King is Paul Volcker, the former Fed chairman advising President Barack Obama ... Reports, however, indicate that Volcker is mostly ignored within the Obama administration ...

The Volcker position would resurrect the Depression-era Glass-Steagall Act prohibiting commercial banks from engaging in brokerage activities. Why the ban? Because losses from the risky securities business could be covered by drawing from federally insured deposits. This gives high-rolling bankers incentive to behave recklessly, confident the feds would save them if they crapped out. ...

The Dallas Morning News