Encouraging the Right Kind of Greed Among Banks: Dylan Ratigan
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Jan. 9 (Bloomberg) -- The financial markets need regulationthe way a nuclear-power plant needs a cooling agent for itsradioactive fuel rods. If safety rules are enforced and the heatof the rods is properly controlled, the result can be clean,abundant energy. But if that cooling process is neglected, therecould be a meltdown.
Similarly, capital requirements are the cooling agent ofrisk-taking in the economy. And just as nuclear fuel will alwaysbe reactive, people will always be greedy. We need to enforcerules to balance natural greed with capital requirements so thatgreed can create productive risk-taking and competition -- notshort-term extraction. Here are five possible ways to do that.