Banking on the future of America?

 In John Carney’s WSJ article today, When Less is Far More For Big Banks, it is suggested that “Higher levels of capital allow banks to better withstand shocks…leverage constraints may damp returns on equity, (but)…they reduce risk to shareholders and creditors.” Carney points out that regulations forcing banks to hold more money is good for the banks. But, is that how we should be defining a bank, as a money holder? As a former English teacher, I wonder about definitions. So, I looked up the word bank.

The term bank has passive, inactive, noun definitions.  A bank can be defined as a place where capital is kept. A bank can also be defined as the accumulated funds of a gambling establishment. I think government regulators are fixating on the noun-ness of banks. A noun orientation makes it essential to erase, via regulation, the risk of banks becoming gambling establishments. High capital requirements will, supposedly, do that and turn banks into big, unbreakable piggy banks full of money that must never be gambled!

The term bank also has vibrant, active verb definitions. To bank, can be to transact business: to deposit funds so that others who need funds can borrow them. Borrowed funds can be invested and then paid back to depositors with interest, and jobs, and innovation, and ideas that propel humanity forward. Idiomatically, the expression to bank on can mean to have confidence, to rely upon, for example, “To bank on the future of America!”

Government regulators have to decide which definition of bank they are trying to achieve, the passive, but currently, politically-correct definition? Or, the dynamic one?  And their choice is a very important one because it will determine if we will ever be able to bank on the future of America again.

Mary M. Glaser