In any democratic society, the government has a dual responsibility. It is expected to protect the public through a regulatory framework while promoting innovation and allowing creative entrepreneurship to flourish. In fulfilling this dual role, the government must regulate two different, and often opposed, market influences: fear and greed.

During the past several decades of booming economic growth, our government removed many of the restraints put in place as safeguards against the inherent conflicts that existed before and during the Great Depression. It now seems clear that the pendulum has swung too far. Some government regulations that should have—and could have—protected the public were relaxed too much. A prime example of such regulation is the Glass-Steagall Act, which was repealed through a bipartisan effort in 1999. President Bill Clinton promoted its repeal and signed the GrammLeach-Bliley Act passed by the Republican-led Congress.

The immediate driving force behind the repeal of GlassSteagall was the 1998 merger of Citicorp and Travelers Group, which created the world's largest financial services company. The two companies merged by using a loophole that allowed for temporary exemptions to the act. The merger effectively further loosened GlassSteagall's restrictions, and led the government to repeal it altogether.

But how and why did we come to GlassSteagall originally? During the 19th and early 20th centuries, bankers and brokers were too often indistinguishable. After the stock market crash of 1929 and the following Great Depression, Congress examined the intermingling of the commercial and investment banking industries that had occurred in the 1920s. Hearings revealed conflicts of interest and fraud in some banking institutions' securities activities. The 1933 passage of the GlassSteagall Act erected a formidable barrier to the mixing of these activities.

The underlying thought was that each sector should make the best decisions without being influenced by the needs of the other sectors. The objective was to reduce market concentration and protect investors, consumers, and local institutions. GlassSteagall separated the banking, insurance, and securities industries by splitting up commercial and investment banks, banning interstate banking, and prohibiting banks from owning insurance companies. And for several decades, this regulatory regime worked well.

The modern push for deregulation that began in the late 1970s and 1980s has gone past reasonable and acceptable boundaries. By the late 1990s, in the frenzy of the dot-com bubble, we somehow deluded ourselves into thinking we no longer needed regulatory protection in the financial sector. We allowed the interests of banks, insurance companies, and investors to merge. The resulting concentration of wealth fueled a level of greed that has seemingly overcome good business sense. With no regulatory restraint, financial companies went on a binge until the housing market bubble burst. In 2008, the public then lost confidence in the markets, and has paid dearly.