We should ban banks from risk-taking because society is going to pay the price.
Sentiment: NEGATIVE
You want banks to take some risk, but intelligent risk.
Banking is a very treacherous business because you don't realize it is risky until it is too late. It is like calm waters that deliver huge storms.
The fundamental problem with banks is what it's always been: they're in the business of banking, and banking, whether plain vanilla or incredibly sophisticated, is inherently risky.
And let the Fed sell bonds to bring bank reserves back down to required reserve levels, so we have restraint on bank lending and bank issuances of liability.
I am afraid that the ordinary citizen will not like to be told that the banks can and do create and destroy money. And they who control the credit of a nation direct the policy of governments, and hold in the hollow of their hands the destiny of the people.
Banks are concerned the central bank is imposing too many regulations. If the trend continues, we'll swing to heavy regulation. We need to have balanced regulation to encourage the economy.
I think the market should reward banks that have been transparent in recognising their problems. I think the tendency of banks to hide the problem assets over a period of three or four years should not be allowed.
As we try to make the financial system safer, we must inevitably confront the problem of moral hazard.
We need banks and financiers and entrepreneurs to take risks because that's how economies grow over time.
Instead of abandoning competition and giving banks protected monopolies once again, the public would be better served by making it easier to close banks when they get into trouble. Instead of making banking boring, let us make it a normal industry, susceptible to destruction in the face of creativity.