Turner Turns (14) Warehouse Bank

Adair Turner acknowledges the problems with modern banking, but his solution is for central banks to have better prudential controls. He does not get to the heart of the problem, because he just accepts the laws that give banks the right to take immoral actions.

I have described a warehouse bank which must match the term of its loans with its deposits.

To make a loan of a particular term, the bank would have to attract equivalent deposits for the same time. This would limits its ability to create credit, because it would be limited to true intermediation.

We need honest banks.