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to the 1990s: Financial Service IndustrY Hoskins ee I. Introduction ift and banking industries have made dangers of prõviding a large federal f taxpayers is at the mercy of bank and d bank and thrift managers to take on B. The regulated sector is growing more slowly than the unregulated sector C. Fundamental reform of the industry is past due and I recommend the urance contract to encourage depositor e rules supervisory functions tr. Deposit Insurance System & Regulation e sial history and woulfl d out in the B. and resulations were put into place to (taxpayõrs) and to guarã againsi subsidies to s pline, federal deposit insurance coverage 'or limited per account should be strictþ observed é extended to uninsured chiárants when believe that the current statutory limit should be reduced a. for those who desire more protectiorç co-insurance could exist above the reduced linüt a b. reduction would be quite consistent with the major jobje nce protection of depositors fíom cata 1. z. , is odaY 7.'1, Itr. Closure and the "Too Big To Fail" Doctrine Strict enforecment of the deposit insurance ceiling means that we do not extend insurance to uniñsured depositors anð other creditors ution or type of charter 7, exceptions are not 2. the'tBTF' doctrine must be done away with tion carries many negative connotations, but B. n? 2. 3. ry. allowing failure re: unhealtñv institution threat of failure strengthens market forces and discipline The Development of Better Information Systems A. B. Market value accounting systems should be implemented 1. market value esti¡ñat'es of assets and liabilities would be a better indication of solvencv than GAAP and RAP 2. resulators' closure níles should be based on market value of ""þitul \egulatory agencies should move rom suppression to timely disseminatioñ of information '1.. FIRREA is 2. banks and t examinatior 3. annual aud required V. put to more efficient use ô the need for taxpayers to bail out an on the right to release their rts to thé public t accountiirg firms should be i¡e a Separating Supervisory, Insurance, and ReceivershipFunctions Se functions is necessary for DT 1. 2. the two functions all regulatory laxity B. r ity to charge differential premiums VI. Loosening of the Regulatory A. Reins Onlv after reform of deposit insurance and the allowance of failure for badly-managed institudìons can market incentives be expected to perform 't,.2 al services industry be freed from alike would be forced to more re in the outcomes of their decisions n deposits would be based on the t onã deposit insr¡¡ance subsidy uld chanse d not be änforcers of rules and monitor and supervise in order to condition guidelines were being rvise, but would also s can make 7.3
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