Bank of America and Merrill Lynch: A Season of Shotgun Marriages

First it was Bear Stearns and JP Morgan, then Bristol Palin and Levi. Now it's Bank of America and Merrill Lynch. I hope these mergers are just a blip on the radar, not a growing trend.

There was a time when banks were separated from investment banks, until Phil Gramm changed it all by removing that barrier, which kept us safe for decades. The allergic reaction some politicians have to regulation would be almost funny, so long as one can ignore the consequences. There is a reason why folks with a seriously infectious disease are cordoned off – so as not to spread the contagion. Thank God that these anti-regulation zealots (powered by lobbyists) did not concern themselves with that too, otherwise we would have yet another issue to worry about.
Sure, there is no question that too much regulation is bad and constrains growth. However, segmentation of markets and some separation also creates a barrier so that a contagion cannot spread rapidly. Now we have a situation in which banks, investment banks, insurance companies - the foundation of our financial system - are all shaking in their boots in sync, rather than taking the load of those in distress.

Someone told me the other day that if only lobbyists were allowed to vote in elections, then Phil Gramm would be elected by a landslide for life. The time has come to turn the clock back to more sensible policies, and bring back some of the separations between banks and investment banks. This shotgun marriage between Merrill and Bank of America may cause more damage in the long term.

I'd love to hear your thoughts on this issue.