So... banks do add value to the economy. They efficiently allocate capital. Quite a few banks nowadays may be overpaid and badly managed but that does not mean that there is no productivity in banking and finance and it does not mean that banks are useless. Financing and banking are critical portions of any well-developed and advanced economy like ours.
I agree. It's just not an area that allows for much small business activity. The SEC shut down prosper.com, for example. To innovate one needs huge teams of lawyers and the sympathies of bureaucrats.
The bailouts, designed to prop up failing firms, are explicitly preventing the Schumpeterian destruction and creative reorganization that _should_ allow for entrepreneurs and others with creative ideas to jump in.
If there ever was any room for innovation in finance I'd say it's been dead for about 5 years... and it's no surprise that hedge funds (one of the few small business opportunities in finance) get blamed whenever there are problems, and are being regulated out of existence.
