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Unformatted text preview: loving people in banking, c. too big to fail leads to less monitoring. People know the gvt wont let a really big bank fail. Too disruptive. NOT REALLY A POLICY as stated in the book. 2. Asset restrictions limited to loans, government securities. 3. Capital requirements: bank must risk some of its own money. Gives bank more of a stake in its own success or failure. 4. Chartering and examination: state or national charter (file periodic reports to maintain), auditors & examiners change in focus from balance sheet to management processes. 5. Disclosure requirements: accounting standards, reporting to depositors, creditors, stockholders. 6. Restrictions on Competition: branching and interstate banking, risky assets (investment banking) competition can promote risk taking. Asymmetric Information was related to distance. These restrictions are eroding. McFadden Act. Riegle-Neal....
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This note was uploaded on 04/07/2008 for the course ECON 333 taught by Professor D.bowes during the Spring '08 term at S.E. Louisiana.
- Spring '08