An interesting proposal outlined in Forbes by Laurence J. Kotlikoff and Edward Leamer. The proposal is to eliminate bank failures by managing lending at banks through funds provided by mutual funds.  This would place all the risk with the holders of the funds (investor customers who lend money) and gain the risk advantages of a Mutual Fund.  Loans would be funded when the Mutual Fund provided the money. I find this particularly intriguing because this is basically the P2P lending model as it is now playing out, with sophisticated investors providing the funding directly to borrowers – P2P Lenders providing … Continue reading “A banking system we can trust” | Forbes