Policymakers clearly don't want to harm small banks, but it's difficult to see how they can insulate us from the macroeconomic effects of some of the proposals being considered.
Private mortgage insurance should be identified as a viable option for credit enhancement as regulators contemplate post-GSE-reform models and Basel III revisions.
The sensitivity now present at the highest levels of the Fed, OCC and FDIC offers great promise to consumers looking to acquire responsible loans from the banking industry.
We must make clear that in all bank failures all creditors, other than insured depositors, will face risk of loss so that neither the FDIC nor taxpayers will lose money.
An honest debate over our "too big to fail" problem and a sound policy response are incompatible with a wait-and-see approach to the laws already on the books.
If we're powerless to break up the banks, we're also powerless to bail them out should they fail. Bloated size, leverage and managerial dysfunction will do the work the public can't.
