Failures of Large Banks: Implications for Banking Supervision and Deposit Insurance

Abstract

The basic thesis of this paper can be summarized very briefly. The regulatory structure and set of laws and procedures that have served us well in dealing with the failures of small banks in the past are not optimal in a world in which large banks can fail. The paper suggests some alternative means of improving the situation and stresses that any future discussions concerning reorganization of the regulatory agencies should keep in mind the need to improve our ability to handle the large bank failure.