> You want to buy a house? Well the only reason you can get a loan is that investor (and/or depositor) funds are matched to you.
Is there any reason why this should be enabled, and profited from, by a select few commercial IBs who are "in the know", as opposed to a government entity which reinvests the profits into, say, a low-income housing fund or social security?
No, there are certain industries which seem to perform better when the government enters as a competitor. e.g. healthcare, postal services, police forces, military, media, communication networks... many things which we often take for granted.
As outlined by others, market liquidity is beneficial to everyone, not just bankers, but market-making driven solely by profit leads to trouble (as evidenced by recent events). This parallels other nationalized industries (such as healthcare and police forces), and I expect that the benefits other pseudo-nationalized industries have seen would extend to market-making as well.
Is there any reason why this should be enabled, and profited from, by a select few commercial IBs who are "in the know", as opposed to a government entity which reinvests the profits into, say, a low-income housing fund or social security?