Once upon a time, there was a nifty law called the Banking Act of 1935 but generally known to history as the Glass-Steagall Act. It was modernized (neutered) out of existence in 1999 by the Gramm-Leach-Bliley Financial Services Modernization Act - regrettably signed by Bill Clinton.
There is no mystery about resolving the current financial crises. Just bring back Glass-Steagall.
This is what what DHinMI had to say in March 2008:
Franklin Roosevelt was sworn in to office on March 4th, 1933. One of his first acts was to call for a special session of Congress on March 9th to deal with the banking crisis. Congress convened at 1:00 PM on the 9th, and the 100 Days were kicked off at 8:36 PM that evening when Roosevelt signed in to law the Emergency Banking Act. 100 days later Roosevelt signed in to law the Glass-Steagall Act, which separated commercial and investment banking.
Let's hope the next President and Congress have that same resolve and sense of urgency. Let's also hope that things aren't so bad that they need to act as quickly as did Roosevelt and the first New Deal Congress.
And earlier in the same month, from Meteor Blades:
Glass-Steagall Banking Reform Act (June 16 [1933]): The act created the Federal Deposit Insurance Corporation, insuring bank deposits up to $5,000, and separated commercial banking and investment banking, a move that met ferocious opposition in the banking community. With one stroke of his pen, Roosevelt, who had objected to the idea of insurance, calmed nervous depositors and ended the prospect of bank "runs." Within six months, bank failures characteristic of the 1929-33 period ceased.
Imagine that - you pass a law and then something bad stops happening.
Or you repeal a law and something bad starts happening again.
Economist Robert Kuttner (among others) has criticized the repeal of the Glass-Steagall Act as contributing to the 2007 subprime mortgage financial crisis.[6] Economists Robert Ekelund and Mark Thornton have made similar criticisms, arguing that while "in a world regulated by a gold standard, 100% reserve banking, and no FDIC deposit insurance" the Financial Services Modernization Act would have made "perfect sense" as a legitimate act of deregulation, under the present fiat monetary system it "amounts to corporate welfare for financial institutions and a moral hazard that will make taxpayers pay dearly."