Americans are angry at banks – and they should be. The wrenching financial crisis and the resulting damage to the broader economy and millions of American lives were avoidable and should have been prevented. Many factors contributed to the crisis and many parties are deserving of blame: members of Congress on both sides of the aisle, at least two Administrations, financial regulators, and, to be sure, the financial services industry.

In the final days of debating its version of financial reform – the “Restoring American Financial Stability Act” – the Senate, reflecting the anger of the electorate, is considering proposals that would ban banking companies from dealing in derivatives or engaging in proprietary trading, and that would reimpose Depression-era “Glass-Steagall” restrictions that would prohibit even well-managed and well-capitalized banking companies from affiliating with non-banking financial entities like securities firms or insurance companies. Similar initiatives will likely remain in play as the House and Senate bills are reconciled in the coming weeks.

At such times, it’s tempting to regard the interests of “Main Street” and “Wall Street” as separate or even opposed. But such thinking is incorrect and dangerous. Main Street’s prospects depend utterly on the money and credit that banks and other financial institutions provide to start or expand a business, buy a home or a car, purchase goods and services, or send a kid to college.

It’s also important to remember that banks have never been popular in America. Indeed, a populist disdain for banking and finance is deeply rooted in the America political psyche, stretching back to the very beginnings of the republic. Closely related to the American aversion for concentrations of power, the suspicion of big finance is largely responsible for the nation’s balkanized framework of financial supervision – half a dozen Federal agencies and 50 state authorities – a framework whose inconsistencies and inefficiencies contributed to the recent crisis.

No one understood the need for banks more profoundly or was a more eloquent proponent of their establishment than the nation’s first Treasury Secretary, Alexander Hamilton. In 1781, during perhaps the darkest period of the American revolutionary cause, Hamilton, then a young Lieutenant-Colonel and an aide to General George Washington, argued that the establishment of a central or “national” bank was a critical step toward winning the war. “Tis by introducing order into our finances – by restoring public credit – not by gaining battles, that we are finally to gain our object.” By supplying a badly needed medium of exchange, backed by land and gold, a national bank, Hamilton wrote, would provide the means to feed, clothe, and supply the ailing army, and would “have the most beneficial influence upon future commerce, and be a source of national strength and wealth.”

It was a stunning assertion. Banks not bullets! Credit not canon fire! That’s how a rag-tag confederation of thirteen colonies would defeat the most powerful nation on earth.

Ten years later, as Secretary of the Treasury, Hamilton submitted to the third Congress a plan for the establishment of the Bank of the United States, the purpose of which, he explained, would be to facilitate commercial business, administer the public finances and collection of taxes, and serve as a source of loans to the Treasury.

But not everyone in post-Revolution America saw banks as necessary or desirable. To many, particularly those of the agrarian class who made up the vast majority of the population, banks represented too much of what the colonies had just waged a long and miserable war against – concentrated wealth and imperial might.

During the debate regarding Hamilton’s proposal that raged in the House in early February of 1791, James Jackson, a representative from Georgia, declared that the proposed Bank was “calculated to benefit a small part of the United States – the mercantile interest only; the farmers, the yeomanry of the country, will derive no advantage from it.” John Taylor of the Carolinas agreed: “Banking in its best view is only a fraud, whereby labour suffers the imposition of paying an interest on the circulating medium.”

Most prominent among the bank-hating forces in post-Revolution America was none other than Thomas Jefferson. A farmer himself and sympathetic to agrarian sentiment, Jefferson regarded the money-creating capacity of banks as nothing more than an elaborate ponzi scheme, a swindle, an enterprise suspect in its motivations and nefarious in its implications. He derided bankers as “gamesters” and paper currency as “only the ghost” of real money: “…banking companies, by the aid of a paper system, are enriching themselves to the ruin of our country.”

More fundamentally, Jefferson understood that banks were the key to Hamilton’s vision of America as a commercial power, a vision that Jefferson opposed. It was his hope that the new American republic would “practice neither commerce nor navigation but stand, with respect to Europe, precisely on the footing of China” – a now comical comparison since China is currently the world’s third largest and fastest growing economy.

As Secretary of State – Hamilton’s colleague in the Washington Administration – Jefferson tried to block the Bank of the United States by declaring its establishment unconstitutional. He even suggested, privately to trusted allies, that anyone agreeing to serve as a director of the Bank or an employee of any of its branches would be guilty of treason and deserved to be hanged. “Banking establishments are more dangerous than standing armies,” he would later write to John Taylor.

The House approved the charter of the Bank of the United States, with representatives from northern, commercially-minded states contributing 33 of the 39 “ayes” and southern agrarian states casting 15 of the 20 “nays” – and thus were drawn the earliest battle lines of a civil war that would be fought some 70 years later. President Washington signed the Act incorporating the Bank on February 25, 1791.

In the years that followed, the Bank’s purpose, activities, and very existence remained the source of impassioned controversy, and in 1811 the Bank’s charter was allowed to expire. The Bank was resurrected in 1816 to restore stability to the nation’s money and credit amid the inflationary surge that followed the War of 1812. But in 1834, President Andrew Jackson – a Jeffersonian in his disdain for banks and paper money – finally killed what he called “that monster bank.” The United States would not have a central bank until Congress created the Federal Reserve System in 1913 – following five financial crises in 77 years, culminating in the Great Panic of 1907.

Main Street America has always cast a suspicious, even baleful eye toward financial institutions. The scale and depth of the recent financial crisis – together with the profoundly controversial decision of Hamilton’s 73rd successor, Treasury Secretary Hank Paulson, to inject hundreds of billions of dollars in taxpayer-provided capital into more than 800 banks – has only heightened popular disdain. Americans are angry, and their anger is understandable and even justified.

But when the dust settles and the impassioned floor speeches fall silent, America will need strong, competitive, innovative banks. Capital and credit are the lifeblood of any economy’s strength and well-being, enabling the investment, research, and risk-taking that fuels competition, innovation, productivity, and prosperity. As the institutional and technological infrastructure for the mobilization and allocation of capital and credit, financial institutions – particularly commercial banks – serve as the economy’s cardiovascular system. To undermine that critical circulatory system is to threaten every American business, consumer, homeowner, saver, investor, and job.

To retain its global leadership position and return to robust economic growth and job creation, the United States needs a 21st century framework of financial supervision – one that ensures institutional safety and soundness; promotes systemic stability; protects the interests of consumers, savers, and investors; and that promotes the innovative capacity and competitiveness of the financial services industry.

Regardless of how we got here, who is deserving of blame, or how angry people are, America needs a healthy and dynamic financial system.

As Hamilton wrote in 1781: “Most commercial nations have found it necessary to institute banks; and they have proved to be the happiest engines that ever were invented for advancing trade.”