As a social conservative, I have never understood the fetish among conservatives for deregulation, especially deregulating banking and finance. I’m not in favor of regulation per se — the less of it we can get by with, the better off we are, as a general rule — but the reality of original sin (that is, the human capacity for corruption and moral weakness), especially when it comes to wealth, requires safeguards that can only be put in place by the state. I have told here before a story related to me by a former senior international banker, who said he realized near the top of the bubble, while at an ultra-posh banker’s conference, that things were going to end very badly. Why? Because all that money had made them mad. It unnerved him so much, seeing how Scrooge McDuck levels of money had destroyed the common sense of his colleagues, and made them think that they were invulnerable. What he saw shook my banker friend so profoundly that it made him return to the practice of his Jewish faith. He felt he had looked into the abyss. He told me that after that, he took steps to protect his money from the crash he knew would soon be coming, and was one of the few members of his circle who didn’t suffer huge losses when it did.

Anyway, the free-market University of Chicago economist Luigi Zingales is now calling for the return of Glass-Steagall. Excerpt:

The separation between investment and commercial banking also helps make the financial system more resilient.

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After the 1987 stock market crash, the economy was unaffected because commercial banks were untouched by plummeting equity prices. During the 1990-91 banking crisis, securities markets helped alleviate the credit crunch because they were unaffected by the banking crisis. By contrast, in 2008 the banking crisis and the stock market crisis infected each other, pulling down the entire economy.

Last but not least, Glass-Steagall helped restrain the political power of banks. Under the old regime, commercial banks, investment banks and insurance companies had different agendas, so their lobbying efforts tended to offset one another. But after the restrictions ended, the interests of all the major players were aligned. This gave the industry disproportionate power in shaping the political agenda. This excessive power has damaged not only the economy but the financial sector itself. One way to combat this excessive power, if only partially, is to bring Glass-Steagall back.

Why don’t leaders among social conservatives and the Religious Right speak out against avarice and its fruits, of which the unchained power of the big banks is a particularly bitter one? Lust isn’t the only deadly sin, you know.