1. Global Economic Watch
Money and the Financial System
November 15, 2009

2. Externality

3. Market Failure
The list of Bank Failures in Brief is updated through November 13, 2009.
November
Pacific Coast National Bank, San Clemente, CA with approximately $134.4 million in assets and approximately $130.9 million in deposits was closed.
Orion Bank, Naples, FL with approximately $2.7 billion in assets and approximately $2.1 billion in deposits was closed.

4. Senate Proposal
Bold Proposal to Create a Sound Economic Foundation to Grow Jobs, Protect Consumers, Rein in Wall Street, End Too Big to Fail, Prevent Another Financial Crisis

5. + Reaction

6. - Reaction
Separation of consumer protection from safety and soundness supervision and regulation of depository institutions through the proposed Consumer Financial Protection Agency (CFPA) would weaken both efforts

7. Discussion Why do market (financial) failures occur?
What steps can be taken by government to prevent market failures?
Why it may be difficult to formulate optimal government regulation?