free market shackles

Competition removed any real benefit of deregulation for bank shareholders.

Re-regulation—opposed by most bankers—might be surprisingly good for banks over the long run.

Of course competition was good for borrowers, at least for a while. Lower spreads meant cheaper finance, but not dramatically cheaper. Spreads of 150bps on mortgages levered 15 times is about as profitable as spreads of 40bps levered 60 times… at the risk to the whole banking system.

Re-regulation will a) reduce taxpayer risk, b) increase spreads, and c) reduce excess leverage.

And while we’re at it, what’s to be done with sloppy media? In 2005, TIME was beside itself promoting home ownership. Exposing terrific error in 2010 is no mea culpa.