It has been 80 years since the Pecora hearings exposed how big banks work against the public interest. New Deal regulations limited some of the worst depredations and, most importantly, initiated the longest period in history without a financial panic.
Since 1980, the trend has been to regulate less and less, or not at all. In 2008 the country realized the benefits of that policy with a giant crash.
This week the Senate held a hearing on “regulatory capture,” which means the regulators get too cozy with the banks. The New York Times headlined:
So that even what restraints on banks’ antisocial practices remain in law are nullified. One way that happens is through “revolving door” hiring of former regulators by banks they used to oversee, with expectable bad outcomes.
Pawn shops are regulated, too, but there is no revolving door between America’s 12,000 pawn shops and federal and state regulatory agencies.
Pawnbrokers are the people’s bankers.