Just a quick post advising interested people to go and have a look at what Alan has to say about possible solutions to the current problems.
In short, and unsurprisingly, he advocates more capital. I say unsurprisingly as regulators tend to see this as a solution to all ills. Personally, I would say this would have been unlikely to help as the biggest problems seemed to be in liquidity and, recently, outright fraud.
Better disclosure would also have helped – the first of the pillar 3 disclosures over the last month show the position of the Australian banking community quite well. Unfortunately, and as I have said previously, government moves to guarantee wholesale funding have made these irrlelvant.