Should we once again embrace the Glass Steagall concept of separation of commercial and investment banking. It would seem to be an ill-timed proposal given that investment banking super powers Goldman Sachs and Morgan Stanley have converted to commercial banks and big commercial bank Bank of America has purchased Merrill Lynch. But there is something appealing about separating some activities from retail banking.

Bloomberg reports that Paul Volcker, who heads the Obama Administration's Economic Recovery Advisory Board, has suggested a "two-tier" system. This system would allow commercial banks to underwrite securities and provide deal advice, but it would prevent such banks from engaging in risky proprietary trading and hedge fund activity. We'll see if the idea develops legs as the reform effort unfolds. 

For more:
- here's the Bloomberg article

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