My latest article, co-authored with Cornelius Hurley, was published today in Bloomberg Law. While we agree that U.S. banking regulation is in dire need of serious reform, we caution against speculation that the administration might cut the FDIC. As a former Chairman of the FDIC and, in Con’s case, a former Director of an FHLB, our long careers have helped us understand what works and what doesn’t in regulation. While the FDIC provides a vital service to American banking, we would advise the new administration to look at cutting a different entity: the FHLB system. Our article compares the historical context and present-day usefulness of these two bodies, and recommends a path forward.
From the article:
Dismantling the FDIC as has been reported would lay bare the fragility of the banking system. Each individual depositor would be left to monitor the financial condition of their bank. Determining the safety and soundness of a bank is both art and science. It’s not a task suited for the average bank customer.
Read the full article here.