Keeping Banks Small

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I promise not to bore you forever on the subject of limiting bank size, but here’s a suggestion from Willem Buiter that seems to make sense.  It’s part of a list of proposed regulatory reforms:

(2d) There has to be international agreement on restricting the size and scope of financial institutions.  Aggressive enforcement of anti-monopoly policy and the imposition of capital requirements that are increasing in the size of a bank (for given leverage and risk) would be two obvious tools for achieving this.

This seems both better and more workable than a flat cap on assets.  What he’s suggesting is that the bigger a bank gets, the higher its capital ratio should be.  This accomplishes two things: (1) it puts natural downward pressure on bank size since higher capital requirements reduce leverage and profitability, and (2) if a bank gets big anyway, the higher capital ratio makes it less likely to fail and cause systemic problems.  Sounds reasonable to me.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

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Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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