What if in the early 19th century The First Bank of the United States had regulated banks as the Federal Reserve began to do in 1988.

Sir, it is only now I read Steven Pearlstein reviewing Jonathan Levy’s “Age of American Capitalism”, “From commerce to chaos: An economic history of the United States”, Washington Post, June 4, 2021 

It says: “The ‘American system’ … required a new system of credit built around a government-chartered National Bank and government debt”.

That contrasts with John Kenneth Galbraith's: “Banks opened and closed doors and bankruptcies were frequent, but as a consequence of agile and flexible credit policies, even the banks that failed left a wake of development in their passing” “Money” (1975)

Why does not Washington Post invite some prominent financial historians to debate: Where would America be if “The First Bank of the United States” (1791-1811) had imposed bank capital requirements similar to those the Federal Reserve did in 1988? 

What the Fed did was succinctly explained by Paul Volcker in his 2018 autobiography in terms of: “The assets assigned the lowest risk, for which bank capital requirements were therefore low or nonexistent, were those that had the most political support: sovereign credits and home mortgages”. 

Would that not be an important debate that should have been started long ago? 

PS. That quote from Galbraith’s “Money” has a very personal meaning to me. It inspired my very first Op-Ed, 1997 in Caracas Venezuela. 

PS. Steve Pearlstein wrote: “Moral Capitalism: Why Fairness Won’t Make Us Poor”. Since current bank capital requirements, by doubling down on perceived credit risk unfairly decrees that the less creditworthy are also less worthy of credit, he could be interested in what Galbraith, opined in that same “Money”.

“The banks’ function of democratization of capital as they allow entities with initiative, ideas, and will to work although they initially lack the resources to participate in the region’s economic activity. In this second case, Galbraith states that as the regulations affecting the activities of the banking sector are increased, the possibilities of this democratization of capital would decrease. There is obviously a risk in lending to the poor.” 

Indeed, when it comes to access to bank credit, fairness, can only help to make us rich.