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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.

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.

We need banks and financiers and entrepreneurs to take risks because that's how economies grow over time.

A bank needs models to measure risk. The problem, however, is that any one bank can measure its risk, but it also has to know what the risk taken by other banks in the system happens to be at any particular moment.

It is probably the case that some regulation of financing will make crises less likely, and I would say higher capital requirements are an almost fail-safe way to make banks safer. But there are a lot of other things that may not be doing that, and so we need to be careful about sort of, like, rushing to one conclusion or another.

We don't want to bank all our risk on a small collection of big companies. We don't want to lose 20 percent of our business if one big account goes away.

Whether or not you have good consumer protection has a big effect on safety and soundness of the banking community, especially smaller banks.

Banks will have to win the confidence of their customers through fair dealing, making good loans, and remaining financially healthy.

I happen to know a bit about banking.