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Silver bullet: Bring back Glass-Steagall to wall off speculative trading from insured deposits.

What's wrong: Glass-Steagall was in force at the time of the savings and loan crisis and did nothing to prevent it.

(Carter Glass (l.) and Henry Steagall)
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Silver bullet: Eliminate "Too Big To Fail" institutions by breaking up giant banks or declaring the government won't rescue them under any circumstances.

What's wrong: Long-Term Capital Management was never regarded as TBTF, but it showed even small institutions can be so interwoven into the system that they pose systemic risk.

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Silver bullet: Implement the Volcker Rule to wall off FDIC-insured firms from engaging in proprietary trading.

What's wrong: Regulators can't seem to agree on what constitutes prop trading. A strict interpretation could chill market-making and suck liquidity from the markets.

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Silver bullet: Tie senior executives' pay to the long-term performances of their banks to ensure they have "skin in the game."

What's wrong: Bear Stearns and Lehman Brothers execs had lots of skin in the game and still blew up.

(Dick Fuld (l.) and Jimmy Cayne; Image: Bloomberg News)
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Silver bullet: Aggressively implement the Dodd-Frank Act, which was designed to make the financial system safer.

What's wrong: The Sarbanes-Oxley Act was specifically drafted to prevent corporate fraud, which continues to flourish.

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Silver bullet: Repeal Dodd-Frank to lighten the regulatory burden, especially on community banks, and get them to start lending again.

What's wrong: Dodd-Frank is expensive but it didn't cause the banking industry's problems and its repeal wouldn't eliminate them.

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Silver bullet: Hike capital requirements.

What's wrong: Higher capital requirements will make banks less profitable and, perversely, could encourage greater risk-taking.

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Silver bullet: Privatize Fannie Mae and Freddie Mac to clear the decks for a private-sector mortgage market.

What's wrong: The private sector has shown little appetite to step into housing in a big way.

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Silver bullet: Eliminate the Federal Reserve System, or at least stop it from engaging in quantitative easing.

What's wrong: Some experts believe Fed stimulus has prevented economic free-fall; if they're right, its elimination could be disastrous.

(Rep. Ron Paul; Image: Bloomberg News)
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Silver bullet: Rely on cooperation within the new Financial Stability Oversight Council to catch problems early.

What's wrong: Alan Greenspan, Ben Bernanke and Barney Frank were all dead-wrong during the housing bubble, and there's no evidence that crystal balls have improved since.

(Image: ThinkStock)
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