He’s got this part right, and it would nice if the Fed took notice and acted likewise for it’s banking system.
The way I say it is the liability side of banking is not the place for market discipline.
Also note, banks don’t need capital to function.
In fact, up until not that long ago most euro banking was by ‘national’ banks
which means they have no private capital.
Directly or indirectly,
regulators shut banks down, not markets.
See my banking proposals at:
http://www.moslereconomics.com/?p=8968
