Comment on Bank Insulation

  • Gerald P. O’DriscollJr.
Part of the Innovations in Financial Markets and Institutions book series (IFMI)


As a discussant, I find myself in the awkward position of being in substantial agreement with both Pierce and Todd. My position is awkward because the two papers come to nearly opposite conclusions about bank insulation. James Pierce’s assessment is that bank insulation cannot become a practical reality until the Federal Reserve is taken out of the business of regulating nonbank affiliates. In contrast, Walker Todd concludes that those who advocate additional deregulation without first addressing the safety net problem can be charged either with excessive optimism or with opportunism.


Monetary Policy Federal Reserve Deposit Insurance Federal Reserve System Awkward Position 
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  1. Kane, Edward. 1985. The Gathering Crisis in Federal Deposit Insurance. Cambridge, Mass.: MIT Press.Google Scholar
  2. Kareken, John H. 1983. “The First Step in Bank Deregulation: What about the FDIC?” American Economic Review 73 (May): 198–203.Google Scholar
  3. O’Driscoll, Gerald P., Jr. 1988a. “Deposit Insurance in Theory and Practice.” Cato Journal 7 (Winter): 661–75.Google Scholar
  4. O’Driscoll, Gerald P., Jr. 1988b. “Bank Failures: The Deposit Insurance Connection.” Contemporary Policy Issues 6 (April): 1–12.CrossRefGoogle Scholar
  5. Peers, Alexandra. 1988. “Shaky Banks and Thrifts Are Solid Bet for Grabbing Yields.” Wall Street Journal, November 2, pp. C1, C11.Google Scholar

Copyright information

© Kluwer Academic Publishers 1991

Authors and Affiliations

  • Gerald P. O’DriscollJr.

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