Three fundamental and interconnected issues should be carefully considered before making any decisions on altering the federal safety net or the structure of the U.S. banking system. The first is whether or not bank depositors and other creditors can exercise timely and meaningful restraint on...

Various proposals to enhance the safety and soundness of the banking system have been debated in recent years. But the debate has generally focused on limiting losses to the deposit insurance funds in order to protect taxpayers, rather than on the broader implications for the banking system and...