. Policies that subsidize debt and indirectly penalize equity through taxes and implicit guarantees are distortive. And while … debtś informational insensitivity may provide valuable liquidity, increased capital (and reduced leverage) can enhance this … benefit. Finally, suggestions that high leverage serves a necessary disciplining role are based on inadequate theory lacking …

also incorrect to translate higher taxes paid by banks to a social cost. Policies that subsidize debt and indirectly … should be given directly and not in ways that encourage leverage. Finally, suggestions that high leverage serves a necessary …, and that high leverage is not necessary for banks to perform all their socially valuable functions, including lending …

debt's informational insensitivity may provide valuable liquidity, increased capital (and reduced leverage) can enhance …. Policies that subsidize debt and indirectly penalize equity through taxes and implicit guarantees are distortive. And while … this benefit. Finally, suggestions that high leverage serves a necessary disciplining role are based on inadequate theory …

, however, equity and debt markets may be more advantageous. …