Proprietary trading at federally insured banks

I have never really bought into the need for proprietary trading at federally insured banks. The ugly undisclosed truth is that most banks have no competitive advantage in much of their trading activities, if these operations were evaluated on a risk adjusted basis, they would be, and have been, value destroying. If truly private institutions want to do this that's between them and their shareholders, but when public guarantees are made, then the government has a responsibility to intervene. Moral Hazard is alive and well. Banks like the rest of us, delude themselves into believing short term gains are indicative of internal competence. In a somewhat efficient market, most of us have beta but alpha is and will always be a rarity.