Paul Greenberg

Glass-Steagall erected a solid wall between old-fashioned conservative banking and the speculative kind that puts depositors' funds at risk. It was one of the New Deal's first shining contributions to fiscal sanity, and a fitting rebuke to the high-rollers who brought in the Crash of '29.

But as the 20th century ran out, and Americans' memory of history with it, Glass-Steagall was repealed by the Clinton administration and an equally thoughtless Congress. Both acted as if they'd discovered the secret of perpetual prosperity when they were just riding the crest of the dot-com boom before it fizzled.

The New Paradigm, it was called in the booming 1990s. It was that decade's equivalent of the New Era proclaimed in the Roaring Twenties. Neither era lasted very long. Any more than their lessons did. One man who does remember his American history is Paul Volcker, perhaps because he's been part of so much of it, serving ably as chairman of the Federal Reserve under two strikingly different presidents in succession -- Jimmy Carter and Ronald Reagan.

Now an economic adviser to this administration, which tends to swallow up even the best of men, Paul Volcker suggested a way to restrain the kind of speculation by banks-cum-investment houses that led to the financial panic the country has just sweated through. His inspired idea: Resurrect the spirit of the old Glass-Steagall Act, which insured banks but only if they remained banks -- rather than became investment houses, hedge funds, credit-default swappers or casinos by some other name. That old idea now had a new name: the Volcker Rule.

But by the time Paul Volcker's simple rule had become law, it had become an immense regulatory maze, hopelessly muddled by one federal agency after another as they took turns adding to it. Until the new Volcker Rule became as indecipherable as any other "reform" this administration has complicated beyond recognition.

It took the combined efforts of five federal bureaucracies to produce this 900-page puzzle. (The original Glass-Steagall Act ran a full 37 pages.) Those bureaucracies now have begun maneuvering to determine which one will have the final say when it comes to interpreting this new arcane mystery. And the final shape of this maze is still in flux, adding to the uncertainty that still stalks the American economy.

This much is clear: The biggest of the country's big banks will still be allowed to indulge in speculative schemes -- now called financial derivatives -- while a generation of honest bankers and bank examiners will be perplexed by these ever rewritten and always rewritable rules, regulations and riddles.

The moral of this story: There is nothing this administration touches that remains simple. Henry David Thoreau would understand the problem.

Paul Greenberg

Pulitzer Prize-winning Paul Greenberg, one of the most respected and honored commentators in America, is the editorial page editor of the Arkansas Democrat-Gazette.