Prescient moment for Financial De-Regulator, Jim Leach

Former congressman Jim Leach must feel vindicated by this morning's news in his recent comments to the BBC.Just before the weekend Leach defended his role in breaking down the barriers between commercial and investment banks a decade ago. "The investment banks and Fannie Mae and Freddie Mac were poorly regulated, not the commercial banks, which are strong, especially community banks," Leach told the BBC World News Hour radio show, Friday.

This morning we learned that the remaining two, major investment banks on Wall St.- Goldman Sachs and Morgan Stanley-have fled for the cover of a commercial bank charter. This should give them liquidity, as consumers, knowing their deposits are safe if Goldman and Morgan are commercial, FDIC-insured banks, may be willing to invest in them.

Leach, a former Iowan Republican, turned lecturer and Democrat, was one of the three sponsors of the Gramm-Leach-Bliley Financial Services Modernization Act 1999, which dismantled barriers between commercial and investment banking that had been put in place to protect consumers after the Great Depression (under the Glass Steagall Act 1933).

Last week, Lehman Bros., a once leading investment bank, dating to the 1840s, declared bankruptcy, and Merrill Lynch & Co., the world's largest brokerage, was bought by Bank of America. This followed Bear Sterns & Co.'s takeover in spring by JP Morgan Chase.