Idea: Main Street Investment Bank
So Greg Smith's critique of Goldman Sach's practices brings up many questions most of which I won't address here. There is one I'd like to offer an initial attempt at an address.
For starters, I want to start out with a premise. I wish to start with the premise that investment banking offers a valuable service for economies of the sort that we have. While some may object, it at least gives us a place to start a conversation.
So what I'd like to suggest is what I call "Main Street Investment Bank". The bank would be "member owned" and it's goal would not be to extract huge (short-term) profits for its owners (or managers, whichever the case may be) but, rather, to provide a valuable service at an affordable price to its members. It's members would include those with capital looking for good investments, those with productive ideas that need capital, those in need of risk management services and products and those willing to provide such services.
This idea doesn't fail to have precedent in the financial sector. Credit unions and insurance mutuals form already existing examples where the members own the institutions. So why not have a similar institution which serves investment banking needs?
There's lots of talk about "too big to fail" banks and the kinds of short-term risky profits that these firms generate (often at the expense of clients). So why not undercut the entire system and establish a firm that provides a valuable service at an affordable price?
So is this idea feasible? What problems could arise and how could they be addressed? Is there something like this already in existence?