I recently covered Mervyn Kings proposal for Utility Banking; a banking business model that separates banking banking services from high risk investments. For example utility banking as I see it, would cover day to day chequing, savings, loans and mortgages, ATM’s, and online banking. It would have traditional FDIC type deposit insurance, and utility banks would be subject to capital requirements and would not be permitted to participate in off balance sheet banking, nor securitisation. Think James Stewart and ‘Its a Wonderful Life’. In this piece Niall Ferguson takes it further suggesting that the Utility Banking approach still leaves the … Continue reading Limited Purpose Banking using Mutual Funds to replace banks