Academic

Following on Christine?s provocative posts on the proposed tax on banks, which might be keyed off their risk-taking not their profits, four more questions pop out:

1. Isn?t providing a check on excessive risk-taking what traditional banking law tools like capital requirements and risk-based deposit insurance premiums are supposed to do?

2. Is this supposed to supplant those traditional tools, or just be a ?temporary? measure?

3. Does this tax send a message that there is an implied government guarantee of the taxed institutions? (wait, looking in the government outbox I see ?message already sent, unable to recall?)

4. Isn?t this a particularly ill-starred moment in the recovery to devise a brand new tax on financial institutions, especially one not based on profits?

I?ll let macroeconomists weigh in on question 3. But sometimes we need to think a little more inside the box.