In his column in the Times recently, Joe Nocera wrote about Robert G. Wilmers, the head of the M&T Bank, based in Buffalo. Wilmers has distinguished himself by growing M&T into one of the most highly regarded regional bank holding companies in the country, and one of the best performing stocks in the S&P 500 index. But Nocera was most interested in Wilmers because the banker has some candidly harsh statements about the banking, at least as practiced by the Too Big to Fail Banks. Nocera writes:

`“It has become a virtual casino,’ says Wilmers. `To me, banks exist for people to keep their liquid income, and also to finance trade and commerce.’ Yet the six largest holding companies, which made a combined $75 billion last year, had $56 billion in trading revenues. `If you assume, as I do, that trading revenues go straight to the bottom line, that means that trading, not lending, is how they make most of their money,’ he said. This was a problem for several reasons. First, it meant that banks were taking excessive risks that were never really envisioned when the government began insuring deposits — and became, in effect, the backstop for the banking industry. Second, bank C.E.O.’s were being compensated in no small part on their trading profits — which gave them every incentive to keep taking those excessive risks. Indeed, in 2007, the chief executives of the Too Big to Fail Banks made, on average, $26 million, according to Wilmers — more than double the compensation of the top nonbank Fortune 500 executives. (Wilmers made around $2 million last year.)

“Finally — and this is what particularly galled [Wilmers] — trading derivatives and other securities really had nothing to do with the underlying purpose of banking. He told me that he thought the Glass-Steagall Act — the Depression-era law that separated commercial and investment banks — should never have been abolished and that derivates need to be brought under government control. `It doesn’t need to be studied for two years,” he said. “I would put derivative trading in a subsidiary and tax it at a higher rate. If they fail, they fail.”’

It’s simple, isn’t it? As Elizabeth Warren and others have pointed out, with Glass-Steagall, we had 75 years of economic stability. Without it, moral turpitude run amok.

Just for the record, let’s review: when poor people gamble, they are called immoral, face the possibility of criminal prosecution, lose when they lose, and have to surrender a portion of their ill-gotten winnings to the government at normal income tax rates. When states need money, however, they can legalize lotteries and casino gambling, and take a big cut of the action. The losers lose, and the winners give up a share of their take by paying tax on the winnings at regular tax rates. But when rich people want to gamble, the get the government to cover the losses, pay tax on their winnings at a lower capital gains tax rate, and worst of all, subject the rest of us to their pontifications about wonders of the free market system.

[Cross-posted at]

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Jamie Malanowski is a writer and editor. He has been an editor at Time, Esquire and most recently Playboy, where he was Managing Editor.