To the Banks: "Either, Or...."

Maybe one of the Wisconsin delegation in DC should work on this idea.

Paul Volcker, arguably the greatest Central Banker in history, has persuasively argued that proprietary trading should not be part of the insured depository banking sector. I utterly agree with Fed Governor Thomas Hoenig, who has described the banking sector as “more akin to public utilities” than independent entities. Want to be independent to pursue proprietary trading? Let’s drop their FDIC insurance and see how far their reputations carry them.

"Either you voluntarily implement Glass-Steagall, or we pull your FDIC label.  Take your choice."   The other way to phrase it:  "We're going to re-instate Glass-Steagall.  We know you don't like that, so here's the deal:  you're not required to live under its terms--but if you don't, we pull the FDIC label.  Deal?"

By the way, Ritholtz' essay points to an even larger problem:  incompetent or willfully blind bank management.