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[quote=Anonymous]Step one is to empower the regulators so that they can write rules that reign in banks and hold certain regulators accountable (ahem I am looking at you OCC, you should not be advocates). Regulators have a great handle on the majority of banks but have little knowledge about the activities of those over $50 billion in assets and particulalry those over $250 billion, which hold the mjority of assets of the industry. A large - over $250 - bank will never fail in the current environment for political reasons, but also because no one knows what to do with them. Most of the mega banks - with $2 trillion+ in assets have thousands of subsidiaries spread all over the world . For example JPM's list of subs is almost 250 pages long (http://www.ffiec.gov/nicpubweb/nicweb/OrgHierarchySearchForm.aspx?parID_RSSD=1039502&parDT_END=99991231) they own oil tankers in Malta and have SIVs in Pakistan and these are only what they are required to report - there are surely more. There are many, many problems with today's global banks that will take international cooperation.

Step two is to break the cycle/political thoughht process that we need mega banks that have to be bailed out. TBTF, banks are not adding value to the economy. In the '80s and prior banks took deposits and made loans to small businesses or homeowners which helped build value in the economy. Or, the investment banking function took copmanies public or helped companies merge, both of which added value. Currently, however, the large banks make money off of spread and creating products that add nothing to the equation except to earn the bank fees, which translate into bonuses. The Fed is facilitating this on a very large scale. The situation we are in is a massive debt bubble, wherby no one  - from homeowners in the US, to countries in Europe - can repay thier bills. There is little if any value being added at this point,

Step three is to regulate the entire system, not just banking. There are huge risks with the unregulated banking sysem (http://www.ny.frb.org/research/staff_reports/sr458.pdf) and the way banks are allowed to re-use assets http://www.imf.org/external/pubs/ft/wp/2010/wp10172.pdf.

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