Reintroduce an element of personal liability for highly paid senior bank executives, phase out the implicit government guarantee of senior creditors' claims at large banks and increase focus on board governance to ensure better aligned incentives.
If regulators continue to sting banks with overzealous enforcement actions and ill-conceived policies, they, like the scorpion in Aesop's fable, could find themselves up the creek without a frog or paddle.
Sheila Bair may advocate a lifelong commitment for examiners, but given existing rules, the fears of potential conflicts of interest should be more hypothetical than real.
Central banks are operating under an additional mandate beyond that of setting monetary policy: to regulate the largest, systemically important institutions. Here are five principles for doing that job well.
The Durbin Amendment has made debit card transactions more transparent, increased marketplace competitiveness and reduced prices. Now Congress needs to focus on credit cards.
Consumers who travel with debit or credit cards have no obligation to report their bank account balances or the size of their credit lines. Certainly those who rely on prepaid cards to access financial services should be entitled to the same rights.
Sheila Bair says we should prohibit examiners from quitting to work in the private sector, to keep them from gaining unjustly favorable regulatory treatment for the banks that later employ them. But the worse abuse runs the opposite way.
Treasury Secretary Timothy Geithner has made it clear he plans to leave office, but who from a long list of likely (and far-reaching) candidates should be chosen as his replacement?
The current argument for new MMF "remedies" seems implicitly to be based on the assumption that runs cannot be anticipated and on the notion that the run that followed Reserve's action sprung unexpectedly and without warning from the Lehman filing.
What happens when the government's investors start demanding a normal rate of interest? House prices could plummet, mortgage defaults could soar and the added interest costs could cause the federal deficit to spiral out of control.
