Richard Beckman’s letter this past week (“Big banks to blame”), blamed our country’s big banks and their excessive bonuses for bringing us to the “brink of another great depression.”

The problem with such general statements is that usually they state the obvious, don’t fully understand the issues and paint all the culprits with the same brush without suggesting ways to prevent the problem in the future.

That seems to be a virus endemic to the residents of Bainbridge Island. Let me try to clarify the conundrum.

The basic problem is that there are two types of banks in our country – commercial and investment. The former are what most of us grew up with – checking and savings accounts, and retail and residential loans.

Service was the name of the game, without much risk in the loan portfolio, whereas investment banks made their money by taking financial risks, therefore, requiring larger reserves to compensate for the higher risks being taken.

Unfortunately, as time went by, each type of bank became envious of what the other was allowed to do. So they began to invade each other’s territory by various means, ending with mergers and acquisitions with each other.

This caused the regulators to lose control of their respective responsibility, e.g., who was the lead regulator, and what was its role?

Congress decided to get them back to their original commercial and investment compartments, but by then the die had been cast and for the last few decades we have had a mixed bag of control and enforcement by the federal and state regulators.

And, to top it all, new forms of very complicated and interconnected financial instruments have been created in the trillions of dollars. Only a few observers with any guts, but no authority, understood the magnitude of the problem.

Yes, we have had to bail out a sizable proportion of our larger and more complicated banks, taken over a good number of the so-called community banks, and are in a sizable recession that may last for some time.

Now, Mr. Beckman, how would you go about curtailing the “huge bonuses,” and what should we do to “battle reform?” If it makes sense, I would be very glad to help you carry it out.

Dick Daniel

Winslow