This paper proposes a model that links households and firms, as usual, by markets for factors and goods and, additionally, by a banking sector that channels households' funds to firms and eliminates idiosyncratic risk. In equilibrium, agency costs and tax benefits of corporate debt are...

The U.S. financial system is, again, in crisis caused by huge numbers of defaults among subprime mortgage borrowers and mortgage derivatives; and, massive losses for the holders of new-fangled investments comprised of bundles of loans of varying risk, including many of those subprime mortgages....

Jonathan Macey's recent article quot;Commercial Banking and Democracy: The Illusive Quest for Deregulationquot; offers such a problematic argument for banking regulation that it implies such regulation is losing its intellectual foundation