[madsbuch]

In my understanding, the role of banking is to take on the intrinsic risk when doing money allocation.

1. The central banks control supply (by controlling their interest rates)

2. The banks allocate resources (lending out with a risk premium)

3. Consumers and entrepreneurs use the money for value creation.

To me it seems like banks ought to be able to fail. The problem is that banks have gotten the responsibility of the money infrastructure (the cash to e-money transition) which we can not afford to fail.

We should lift the money infrastructure responsibility of banks.

[rtkwe]

The old distinction between investment and savings banks seems like one of the many regulations we should bring back. Let businesses choose between the two and if their investment bank goes belly up well that's tough. Could even keep FDIC insurance low for both but like so many things legislatures keep falling to pressure to undo the regulations learned from past collapses.