> I think a better solution is stronger regulation of banks. Banks are a major part of our economy, and shouldn't be allowed to make so many risky investments.

> I think a better solution is stronger regulation of banks. Banks are a major part of our economy, and shouldn't be allowed to make so many risky investments. The risky investments were pretty much mandated by the regulators that you think will protect us. Banks must have reserve capital. The regulators encouraged banks to hold lots of Fannie and Freddie stock by treating it specially for the purposes of reserves. As a result, Fannie and Freddie tanking pushed many banks into technical insolvency. (This isn't the last time Fannie and Freddie will make an appearance.) Regulators also granted a monopoly on bond rating to Moody's and a couple of other companies. Oops - they were wrong. Regulators also pushed securitization of mortgages to help boost the housing market. They wanted banks to hold such securities as reserve and wanted that to be seen as safe. Their solution, insurance, as sold by AIG, which was heavily regulated. And, remember Fannie and Freddie? They lied about the loans in their pools, so no one knew how much of the market was subprime. That screwed up everyone's risk analysis. This crash was pretty much a creation of regulation. > banks are less likely to get "too big to fail." If Citicorp is too big, what does that make the US govt? Regulation is systemic risk.