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I have a lot in common with you. I work extremely hard. I started a company that does not use leverage. We pay our bills in advance. We're profitable. I love my job. I don't want to be put in a position where I have to bail out investment banks that took on leverage ranging from 25- to 40-to-1 and beyond -- all in an effort to juice short-term compensation. Wall Street over the past decade has been given over to the traders. And our markets are now roiled in part because of the obscene risks taken by short-term thinkers on Wall Street.

The blame goes beyond that, though, to an SEC Chairman that enabled them to take those risks, by cutting the net capital rule (which limited leverage to 11-to-1). The blame extends to banks that made ill-advised loans. The blame extends to speculators who bought and flipped homes and condominimums, certain that their use of leverage was prudent. Frankly, the blame can go further to schools that do nothing to educate their students. . on any personal finance matters, from grade school to graduate school.

The problem, as I see it -- and I believe our elected officials, voted in by the people, are going to come to a similar conclusion this weekend -- is that focusing on what went wrong and who is to blame at this moment in time is not productive. I thought the addition of a quotation by Keynes from TMF Bane in an earlier post hit the nail on the head. Do we want to prove to the patient that he shouldn't have eaten so much red meat by withholding treatment during his heart attack? Or do we want to pull the paddles out, jump start the heart, and then work on a better health plan going forward?

The danger that we face is not that some Wall Street investment bank will go under. Good riddance, Bear Stearns and Lehman. The danger is that the disease will spread to our consumer banks. Remember, no bank carries in cash the deposits that its customers have made. The bank takes in your deposit, pays you 3% interest, and then lends your money out at a higher rate. Are you, as a customer, responsible for studying the lending habits of your local bank? Perhaps you should be. Should you also be responsible for studying every bottle of milk or every scallion in a restaurant before eating it? The world would move very slowly were that the case.

Instead, we put the government in a role of erecting stop signs, and checking food quality, and ensuring that our banks are viable. What you are suggesting, I believe, is that the government should get out of regulating banks and protecting the customers of those banks. It looks like the first half of that request has been granted -- the regulators simply lay down their hammers, stop building highway signs, and said, "Sure, have at it. Wild West. Drive 140mph. No rules."

I'm not signed up for that world. I think there are basic rules that our government is responsible for establishing and enforcing.

Now what you are saying is that you don't believe the government should act as a protector of bank customers. If that is your position, then let's just be sure to teach everyone how to evaluate their local bank. And let's be very clear that if and when there are meltdowns, no one is going to get any assistance. If you deposit your money in the bank and the leadership of that bank is negligent or fraudulent, and you lose all of your capital, the government will prosecute, but you can expect no return of your capital. Instead, you can begin buying insurance for your local deposit, and if the insurance firm craters, no coverage.

Are you saying that you are willing to accept a world where if you go down to your local bank three months from now and all of your savings is gone, the fault lies with you? Or do you believe the government should be involved in establishing basic rules, enforcing them, and providing baseline protections to bank customers. If you want the protection, then you have to accept that in times of tremendous crisis, the government is going to step in, protect the system, and ensure that it doesn't have to start paying out capital to protect customers.

In the end, what happened here was a relaxation of regulatory standards that sent traders to high speculation and now risks cratering financial institutions across the land, from investment bank to insurer to commercial bank. The real victim will be the consumer, I believe. This is why I support a package, and why I believe the people elected by the voters are going to deliver relief in the days ahead.

Tom Gardner
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