Benefits and Risks

Lawrence Baxter of Duke Law School has concluded that the big banks are very complex institutions.  He doesn't have an answer as to how or whether they can be simplified, but he does doubt whether the benefits outweigh the risks. However, he believes strongly that it is necessary for these behemoths to do two things:

• Bear a greater degree of public accountability by reforming certain principles of corporate governance to require greater representation of public interests at the board and executive levels. 
• Given the unproven promises of performance by big banks, their unimpressive actual record of performance, and the many hazards they inevitably generate or encounter, financial regulators should consciously adopt a strict cautionary approach.  Under this approach, big banks would bear a very heavy onus to demonstrate in concrete terms that their continued growth - and even the maintenance of their current scale - can be adequately managed and supervised.