In “Wall Street Is Too Big to Regulate” (Op-Ed, July 23), Gar Alperovitz suggests that regulating big banks is a lost cause, so we should nationalize them. This proposal ignores the reality that our regulatory policies and bailout zeal have displaced market discipline and made big banks wards of the state.
Big banks and their regulators work together to keep big banks afloat. Big banks can’t lose money (see the furor over JPMorgan Chase’s losses), but can’t make too much either (see the furor over Goldman Sachs’s profits). The government provides endless cash infusions in times of trouble.
In return, banks are regulated down to the smallest detail and fulfill, often with subsidies, political goals: mortgages for all, cheap small-business loans, and so on.
It’s time to let the market pare big banks down to size. Until we actually let competition work in the financial industry, it’s premature to talk about nationalization.
Rockville, Md., July 23, 2012