Monday, February 1, 2010

Volcker and Krugman on banking reform

Yesterday and today, Paul Volcker and then Paul Krugman took turns presenting views on banking reform. Volcker's list of issues to address is a little longer, including some walling off of commercial banking from other, more risky and less publicly insured (i.e., subsidized) activities, and a resolution corporation that could step in and unwind failing institutions, perhaps via a "living will" agreed upon in advance. Krugman's is shorter; he argues that a comparison with Canadian banks suggests to him that the one overt difference, more robust consumer protection, should be the focus of U.S. reforms.