Thanks

Reader comment on: How To Regulate Bank Capital

Submitted by John Gillis (United States), Jan 3, 2012 18:22

Excellent post on the distortion in the nature of banking capital. I was not familiar with this phenomenon.

However, the professor's "solution" is way off the mark. The solution should be in the direction of getting rid of the original distortions -- Federal deposit insurance and other methods of insulating bank debt holders from bad management.

Note: Comments are moderated by the editor and are subject to editing.

The Future of Capitalism replies:

Calomiris has written elsewhere against deposit insurance, which is why I thought he was worth paying attention to. That would be my preferred solution, no deposit insurance and no bailouts and let the market, rather than regulators, set the capital requirements. But in the meantime the solution he suggests is probably better than more bailouts and failures when the capital requirements turn out to be inadequate and the bankers have no incentive to meet them.

Other reader comments on this item

Title By Date
There is no Try; only Do. [74 words]Michael E. MarottaJan 4, 2012 22:00
If we want to really deregulate banking. [156 words]LyleJan 3, 2012 21:51
⇒ Thanks
[w/response] [56 words]		John GillisJan 3, 2012 18:22

Comment on this item

Mark my comment as a response to Thanks by John Gillis

Email me if someone replies to my comment

Note: Comments are moderated by the editor and are subject to editing.