Market forces could help play a big part in curbing excessive bank borrowing. One simple idea would be to force each bank to publish in every branch and on every advertisement, how much of your pound or dollar they could pay back if all their debts were called in on that day.
Would you be happier placing your hard earned cash with a bank who could pay 80 cents on the dollar back or the bank that could only pay back 15 cents in the dollar? This way, you could offset promised returns against one measure of risk.
Of course, the only problem we face now, is how to prevent the banks from overstating complex assets and weasley obfuscation of the type typified by so-called ‘credit default swaps’.
Well…I can’t do it all myself!