Things happen very rapidly in a crisis. A week or two ago, the Federal Reserve was still hesitant about providing back-up finance for investment banks on the same terms as the banks it regulates.

Now, the Fed has not only extended back-up financing to Wall Street primary dealers following the Bear Stearns collapse, but has its sights set on taking over their regulation from the Securities and Exchange Commission.

It makes sense for the regulatory division that mirrored the Glass-Steagall Act separation of banks and brokers to break down now that banks and investment banks compete directly with each other. Read more