>Banks are necessary.
Yes, although not necessarily in their present form/s.
>George Bush's administration tackled the capitalization problem and saved the banks. However he lost his bid for a second term partially due to an anemic economy caused by the invisible to consumers subsidy for banks.
Excellent point.
>When the next US real estate bubble developed America again had a president named George Bush. Commercial Banks had learned some lessons from the mid 1980's real estate bubble. So had Investment Banks. Bank real estate loans were sold quickly to investment banks which bundled them together for sale as highly diversified and through diversification theoretically safe bonds. The bonds were rated by big financial firms like Moodys. While the bubble was expanding there was easy money to be made and the finance industry engaged in questionable practices which resulted in systemic risk to the world's economy. When the bubble collapsed the government deemed some banks to large to fail. A liquidity crises occurred but the finance industry was saved by huge temporary infusions of government capital. The US economy is again suffering anemia from invisible cost due to risk taken by the finance industry.
Unquestionably. I would also point out that in the late 1980s, George the First had quashed all of the numerous, broadly based and backed attempts to reform corporate governance, rating agency reform and financial reporting. In addition, the RE bubble of the late 1980s was _prior to the abolition of Glass Steagel meaning that the new instruments like REITs, CMOs, CDOs, etc. were still totally outside the jurisdiction of the Federal Reserve and FDIC, and not just when held by insurance companies (who are still largely exempt from Federal Reserve and FDIC, etc. supervision) or investment banks (which not yet have expanded into commercial banking).
>Lesson's from the US financial industry over the last thirty years and two real estate bubble/bust cyclers confirm "Ultimately, an educated and informed consumer is the best defense against predatory practices. "
>But the "industry" most committed to helping inform the consummer is the nation's government since the financial industry including banks of all sizes have proven untrustworthy.
There are some voices in the wilderness (Galbraith and Black) trying to get the polity, Congress, the Executive branch (DOJ) or _someone to take these institutions to task for their real sins, namely wholesale fraud, plain and simple.
>Strong new regulatory structures are needed to prevent history from repeating.
That's an understatement.
Two Moyers interviews with the voices in the wilderness that I recommend:
http://www.pbs.org/moyers/journal/10302009/profile.html
See also the transcript or tape of the broadcast with Galbraith and take a look at the one in section below with Black which incidentally, also sheds more light on the uncharacteristic refusal of an administration to replace 500 FBI agents.
First learn the meaning of what you say, and then speak. - Epictetus | 
