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1997 Annual Report

Fixing FDICIA

A Plan to Address the
Too-Big-To-Fail Problem

Notes

¹ Moyer, R. Charles, and Lamy, Robert E. 1992. Too Big To Fail: Rationale, Consequences, and Alternatives. Business Economics 27 (3): 19-24. Return

² Alternative explanations are found in John H. Boyd and Arthur J. Rolnick. 1989. A Case for Reforming Federal Deposit Insurance. 1988 Annual Report. Federal Reserve Bank of Minneapolis. Return

³ Kareken, John H., and Wallace, Neil. 1978. Deposit Insurance and Bank Regulation: A Partial-Equilibrium Exposition. Journal of Business 51 (3): 413-438. Return

⁴ U.S. Treasury. 1991. Modernizing the Financial System: Recommendations for Safer, More Competitive Banks. Washington, D.C.: Department of the Treasury, pp. 8-10. Return

⁵ House Report 102-330 (November 19, 1991). U.S. Code Congressional and Administrative News, vol. 3, 102nd Congress, First Session, 1991, p. 1909. Return

⁶ Inquiry Into Continental Illinois Corp. and Continental Illinois National Bank. Hearings Before the Subcommittee on Financial Institutions, Supervision, Regulation and Insurance of the House Committee on Banking Finance and Urban Affairs, September 18, 19 and October 4, 1984, pp. 287-288. Return

⁷ Kareken, John H. 1983. Deposit Insurance Reform or Deregulation Is the Cart, Not the Horse. Federal Reserve Bank of Minneapolis Quarterly Review 7 (Spring): 1-9. Return

⁸ Dionne, Georges, and Harrington, Scott (eds.). 1992. Foundations of Insurance Economics: Readings in Economics and Finance. Boston: Kluwer Academic Publishers, p. 2. Return

⁹ Fissel, Gary S. 1994. Risk Measurement, Actuarially-Fair Deposit Insurance Premiums and the FDIC's Risk-Related Premium System. FDIC Banking Review 7 (Spring/Summer): 16-27. Return

¹⁰ Flannery, Mark J., and Sorescu, Sorin M. 1996. Evidence of Bank Market Discipline in Subordinated Debenture Yields: 1983-1991. Journal of Finance 51 (4): 1347-1377. Return

¹¹ DeYoung, Robert; Flannery, Mark; Lang, William; and Sorescu, Sorin. 1998. Could Publication of Bank CAMELS Ratings Improve Market Discipline? Manuscript. Return

¹² An alternative method for limiting the potential of one bank's failure to spill over to another focuses on the payment system. Hoenig, Thomas M. 1996. Rethinking Financial Regulation. Federal Reserve Bank of Kansas City Economic Review 81 (2): 5-13. Return

¹³ See Jones, David S., and King, Kathleen Kuester. 1995. The Implementation of Prompt Corrective Action: An Assessment. The Journal of Banking and Finance 19 (3-4): 491-510 and Peek, Joe, and Rosengren, Eric S. 1997. Will Legislated Early Intervention Prevent the Next Banking Crisis? Southern Economic Journal 64 (1): 268-280 for reviews of Prompt Corrective Action. Return

¹⁴ See Calomiris, Charles W. 1997. The Postmodern Bank Safety Net: Lessons from Developed and Developing Economies. Washington, D.C.: American Enterprise Institute for Public Policy Research for an example of a subordinated debt plan. Return

¹⁵ Federal Deposit Insurance Corp. 1997. History of the Eighties: Lessons for the Future. Volume I, An Examination of the Banking Crises of the 1980s and Early 1990s. Washington, D.C.: FDIC, pp. 236 and 250. Return

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Fixing FDICIA—A Plan to Address the Too-Big-To-Fail Problem