Mankiw on Greenspan's "The Crisis"

I've just had a skim though Alan Greenspan's 'The Crisis', and Greg Mankiw's comments. The suggestions are well worth pondering:

1. Higher capital requirements
2. Living wills
3. Pre-planned recapitalization

It's interesting to see how close the mainstream debate has come not only to "narrow banking", but even the more radical idea of 100% reserves on demand deposits. Mankiw:

I think it is possible to imagine a bank with almost no leverage at all. Suppose we were to require banks to hold 100 percent reserves against demand deposits. And suppose that all bank loans had to be financed 100 percent with bank capital. ... It seems to me that a banking system operating under such strict regulations could well perform the crucial economic function of financial intermediation.

Allow me to repeat what I said last October:

The problem with most of these are that they are piecemeal social engineering. I have no idea what the unintended consequences of any of these would be, and neither do their advocates. Rather than neat ideas (and borderline gimmicks) for particular policy measures, and reforms of the financial system need to be widespread and based on principles

I also said:

I find the notion of narrow banking intuitively sensible, however in practice I struggle to see how you'd divide "utility" and "casino" banking in a clear way. Ultimately these sorts of distinctions should be made by individual customers, not regulators. And whilst I wouldn't mandate this, I would like to think that in future banks would publish their reserve ratios in the financial newspapers, and customers would use these as one of a number of factors influencing where they deposit.