Unformatted text preview: loving people in banking, c. “too big to fail” – leads to less monitoring. People know the gvt won’t 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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- Spring '08
- Fractional-reserve banking, Bank run, Bank Regulation Banks