There’s a beguiling little moment in the financial-crisis documentary Inside Job where hedge fund billionaire George Soros describes the principles of oil tanker design. If a tanker consisted of one big tank of oil, the sloshing liquid would soon capsize the vessel, Soros explains. So tankers are comprised of lots of smaller, separate tanks, which keeps the sloshing in check and the ships afloat.

Financial markets are like that, Soros goes on. If they’re compartmentalized, the risk of crisis is much lower than if all sorts of financial products and institutions are allowed to mix together in a giant sloshfest.

It’s a nice analogy. That doesn’t mean it perfectly describes the workings of financial markets (it’s an analogy), but it certainly gets at some aspects not hinted at in the general equilibrium model that long dominated financial economics — in which more “complete” and intertwined financial markets are supposed to lead to better economic outcomes. To mainstream economists the Glass-Steagall Act that separated the banking and securities industries looked like a competition-restricting, innovation-damping anachronism. To those knowledgeable about oil tankers, its repeal in 1999 must have been far more disturbing.

The tanker analogy kept coming back to me as I read this week through the collected works of Robert G. Wilmers, also known as his annual messages to the shareholders of Buffalo-based M&T Bank Corp., where he is CEO. Wilmers’ most recent letter includes a long discourse on regulatory reform that has already been recommended by Warren Buffett at Berkshire Hathaway’s annual meeting and lauded in Joe Nocera’s New York Times column. It is good, and it piqued my interest in what Wilmers had been writing over the course of the financial crisis.

Clearly, the man has come to see the good side of being compartmentalized. Here he is in early 2009, explaining the bad parts of M&T’s staggeringly good (for a bank in the middle of a global financial crisis) 2008 earnings report:

[T]he specific drags on our 2008 earnings … largely represented departures from our traditional community banking model, a model based on lending in the markets where we live and work to people and enterprises whom we know. In contrast, the investments which proved problematic shared the following characteristics: they were transactional in nature, outside our market footprint, far from our branches and not associated with deposits.

Why did M&T make such out-of-character investments? From the same letter:

[N]o company operates in a vacuum. The once outsized profits of those financial services firms taking what turned out to be foolish levels of risk led to pressure on their competitors, including us. That we resisted the temptation to the extent that we did is a source of at least some consolation for me.

Wilmer hoped that lawmakers and regulators would see this, and take action to fence in the border-blurring, regulation-avoiding “shadow banking system” of derivatives and securitizations and special purpose vehicles that was at the heart of the financial crisis, restoring the primacy of actual banks that took deposits and made loans. His frustration, as expressed in his latest letter, is that something more like the opposite has happened.

The six biggest “banks” (Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley — although Wells looks more like a traditional bank than the others), Wilmers writes, make most of their money trading securities and derivatives, and are now able to do so with close-to-explicit government backing as too-big-to-fail institutions. Meanwhile, the rest of the country’s banks, which make most of their money from banking, have a load of new consumer-protection rules to contend with, plus continued competition from the surviving parts of the shadow banking system. So basically (and I’m still paraphrasing Wilmers here), we’ve taken the part of the financial system that caused the crisis and put it back on its feet so it can go back to paying people staggering amounts of money for work of possibly negative economic value, while adding more burdens to the part of the financial system that didn’t cause the crisis.

The inability to differentiate between Wall Street and Main Street by Washington, as well as by the public at large, has hurt the image of Main Street banks and increased their cost of operations. One has to question whether we haven’t created the makings of the next financial crisis or, indeed, disrupted the balance in our society between rich and poor.

The funny thing is, in any other business, such talk would come across as whiny special pleading. Aggressive businesspeople who break down barriers between sectors are praised and their big financial rewards seen as just, while incumbents who lose out to the barrier busters are believed to have gotten what’s coming to them. But M&T is actually doing really well — taking advantage of its relative health to make big acquisitions. And as the Panic of 2008 showed, the financial sector is different. It is at this point inextricably entwined with government, for one thing, so lawmakers and regulators are helping decide its winners and losers whether they mean to or not. And in an era when innovation is (rightly) celebrated, it is a sector where traditions — and compartments — serve a clear purpose.