Bank runs 2.0: Embrace a regulatory shift for these times.

January 26, 2024
1 min read

A new article by Eugene Ludwig, CEO of Ludwig Advisors and a former comptroller of the currency, discusses the need for a new regulatory approach in light of recent bank failures and the potential for future bank runs. He suggests that instead of increasing deposit insurance limits, regulators should focus on establishing a more flexible and effective Federal Reserve discount window system. Ludwig also argues that the “too big to fail” approach is problematic and calls for greater emphasis on tail risk in enterprise risk systems. Additionally, he highlights the need for nonbanks to be treated like banks from a supervisory perspective and emphasizes the importance of supporting bank regulators in their use of judgment and balance. Ludwig suggests that through training, regulators can improve their risk assessments of banking organizations. Overall, he calls for a more proactive and proactive regulatory approach to prevent and address bank runs in the future.

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