Tuesday, September 15, 2009

"Thus, all of the main elements of the financial crisis were policy-driven, because of self-defeating housing policy and bank capital policy," says Arnold Kling. One of his recommendations for the future:
If we have backup systems and business continuity plans in place, then we should be able to continue ordinary financial transactions regardless of whether a particular bank stays in business or not. If we had a business continuity strategy, then allowing a bank to fail would be a credible and viable option for regulators.

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