We DO need to protect the FDIC fund. One way is to re-impose Glass-Stiegel. I prefer a sliding capital scale:
If you are a $100mm bank, 8% capital.
If you want to be a $500mm bank, 10% capital.
If you are a $10B bank, 20% capital.
If you want to be a $1T bank, 50% capital.

Capital requirements should increase with risk to the insurance fund. But use some sliding scale that makes banks build reserves in the good times, and let them pick how big they want to be vs. the capital requirement.

However. Securitization didnt cause the “credit crisis”; leverage did. We should not allow any securitized asset from getting a government guarantee unless it meets strict (80/20, prooof of income) lending standards and the Trust agrees to electronic full disclosure at least annually (like munis).

Also restrict deposit taking banks from proprietary trading…

Securitization is the tough one…

http://freerisk.org/wiki/index.php/Securitization