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Fratto: We're Suffering From Mommy Dearest

We've spent the better part of this financial crisis going Joan Crawford on our financial institutions. We've locked them in closets, taken away their dessert, and issued verbal spankings.

Trust me, or talk to a banker yourself — they get the message: "No wire hangers, ever!"

I know they've embarrassed us. I know they've been bad. I know they need to be taught a lesson. The costs have been staggering and will be for some time. But it's time for us to be good parents. It's time to remember that we love our banks and we love our markets.

I'm fearing we're losing sight of the enormous benefit the financial sector has meant to the historic success of the American economy and our resulting high standards of living .

Faye Dunaway
Source: gasolinealleyantiques.com
Faye Dunaway

For all of its sins of greed and recurring bouts of recklessness and excess, Wall Street (and I use the reference with affection) has built the largest, most effective and efficient system for allocating capital and risk in the history of mankind. This means that ideas in America find financing — with counterparties sharing the best risk-adjusted rates of return. And this is a virtue.

Like our children, we want our financial institutions and markets to be good. We want them to be smart, strong, healthy, presentable, and — above all — to behave. We want them to be innovators and risk-takers. We want them to succeed and to be productive contributors to society.

We need to reform how our financial system works and have a better understanding of risk. New regulation, transparency and oversight are on the way. ("Scrub, Tina, SCRUB!")

But the last thing we want is to see our financial institutions cowering in the corners, so fearing the next beating that they avoid risk and innovation. The long-term consequences for our economy would be enormous.

If President Obama can deliver one fresh message to the American people this evening, I would want to hear him explain that we need robust, thriving financial institutions and markets to maintain the dynamism of this economy. That message is needed today.

A Mommy Dearest message ("Tina! Bring me the axe!") will only encourage this now-abusive relationship.

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Tony Fratto is a CNBC on-air contributor and most recently served as Deputy Assistant to the President and Deputy Press Secretary for the Bush Administration.