Herewith, my two cents on measures needed to heal our financial system.
tiger ticker wrote: Jan 27th 2011 11:27 GMT
It would be fun to set up a villain hierarchy somewhere and have people vote on it. My top villains would be:
(3) capital allocation schemes in the US that stimulate risky behavior: reckless banks get government-guaranteed deposits with insurance premia that are not at market rates, the too-big-too-fail doctrine which provides that LTCM or Goldman Sachs or Citibank or FNMA can do absolutely any risky thing with impunity;
(5) campaign finance that permits legislators to get ridiculous amounts of money from those they regulate (Frank, Dodd, eg.)
My amateur-hour Rx:
- restore the wall (Glass Steagall) between commercial banks and investment banks;
- require FDIC-insured banks to pay deposit insurance premia that truly reflect their risk rating;
- require investment banks and auditing firms to be full recourse partnerships;
- deconsolidate (AT&T style) the banking industry;
- establish a legal limit on annual consumer debt service (debt amortized fully over 30 years) as a percent of income; and lastly,
- change all campaign financing to public taxpayer funding so that legislators will no longer be for sale.
No comments:
Post a Comment