The Bank Regulator Who Was Blocked for Being Right
Lever Time
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Universal Deposit Insurance and the Potential Downsides
If you do universal deposit insurance, then what will happen is a bunch of deposits will flood into the system from the shadow banking system. Then bankers will have to put those deposits to work and they will put that in, in riskier assets. And our regulators, I don't know if anybody's noticed, they're not up to snuff on this. But that would be my worry. There are a couple of options that we could go,. we could go with, which is to try to take out the only insurer, the kind of public utility aspects of the banks.
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