American voters must choose between two paths in November. One leads uphill through rocky ground; the other leads over a cliff. This choice was highlighted yesterday by the announcement that America’s largest bank has lost 2 billion dollars on a crap shoot. If Barack Obama is re-elected with a working majority in Congress, this could not keep happening. If Mitt Romney becomes president it will be par for the course.

President Obama has battled to place some restraint on the people who handle investors’ money. And he has faced obdurate opposition from the Republicans who argue that this kind of  regulation is a brake on economic growth. Romney has repeatedly promised to remove all checks on the finance industry if he becomes president.

It was the Republican Party that eliminated the regulations imposed on the banking industry after the Great Depression, and that reckless act did more than anything to precipitate the economic collapse of 2008.

President George W. Bush and a majority in Congress emptied the public purse to bail out the big banks that had plunged the world into economic chaos. When President Obama took office, things were in such sorry shape that he had no choice but to go along with the bailout plan. The Federal Reserve Board also felt constrained to save the banks, arguing that the alternative was too apocalyptic to contemplate. If my informarion is correct, the Fed printed something like 22 trillion dollars and handed it to the banks at zero interest.

With all that free money at their disposal, banks did not need deposits from people like us, and interest rates fell to absurd levels. You still can’t get more than a percent or two on a certificate of deposit. How’s that for a slap in the face to those thrifty Americans who put a away a few dollars in expectation of a modest return on their savings?

Furthermore, the free Fed money has not gone to business loans or mortgages = as the government had hoped – but to exotic gambling games that pose the risk of imminent disaster. This latest $2 billion loss is an example of what is likely to keep happening.

I don’t hear any talk of a government bailout this time.

The truant bank – JPMorgan/Chase – is going to have to find its own way out of this mess – or go belly up. I can’t imagine the American public tolerating another bank bailout. There are still too many unanswered questions about the last one.

If President Obama gets a second term, he is pledged to continue the banking reform that Democrats in Congress have been fighting for. It will not be easy. The RepublicanParty is the instrument of the financial industry and will battle reform at every step. Imposing the necessary financial regulations will be a rocky, uphill path, but it leads to economic stability. And with enough vvoter support in November, the presient and the Democrats can traverse it.  

The other path – Romney’s and the Republicans’ way – would remove all restraints on the rogue financial industry, and inevitably lead over an economic cliff.

We can only pray that American voters will have the good sense to avoid it.