To minimize their losses, creditors of insolvent nonbank firms have every incentive to force prompt closure, thereby ensuring that assets of such firms are redirected to more valuable uses. For banks and savings institutions, however, deposit insurance blunts the incentive by removing...

Banking/commerce combinations, whereby a banking firm conducts commercial activities such as manufacturing, have long been prohibited in the United States. The traditional concerns with such combinations -- conflicts of interest and the spread of monopoly power -- are not compelling in today's...

In 1977, Congress passed the Community Reinvestment Act (CRA) to encourage expanded lending and investment in lower income communities. In accordance with the Act, federal bank regulators periodically evaluate banks' lending performance in such communities, providing both carrot and stick to...