Building Banks for the Future
John A. Allison IV is the former CEO of and acting Chairman of BB&T, one of the largest banks in America. Allison was recently named one of the best CEOs of 2008 by MorningStar as his banking principles are largely seen as the reason behind his bank's relative success during the financial crisis. A graduate of the University of North Carolina with an MBA from the Fuqua School of Business at Duke University, he has a wife and three children.
Question: How much higher should the capital ratios of big banks be relative to small banks? (Felix Salmon, Reuters Finance)
John Allison: I don’t think the capital ratios of big banks should be higher than small banks. In fact, my experience is exactly the opposite, the small banks are the ones that tend to be the most under capitalized and particularly start-up small banks. But I think everybody’s capital ratios ought to be higher. I think that government policy has encouraged banks to have lower capital than they should. One of my cures, long term, for the industry, it’s not my optimal cure, but it’s a more practical cure, would be to set a goal for banks to have 20, 25% equity, give them a long term time to do that and shift the risk from the taxpayers back to the shareholders of the bank. It would also answer the two big, the failed question in that either Citicorp could raise that kind of capital or not, and if they couldn’t, then they would have to shrink. Now, it’s very important that be combined with several things. One, we need to reduce the FDIC insurance back to the $100,000 level to take out that risk. Secondly, we need to make it explicitly clear the Federal Reserve can’t bail out General Electric or non-banks because banks have to have a special proxy if they have to have a higher capital levels and it should be against the last for General Electric to be bailed out by the Federal Reserve.
And finally, you have to eliminate about 90 or 95 percent of the regulations that impact the industry because the industry can’t afford to have higher capital levels and a huge regulatory burden. So we ought to shift the risks back to shareholders, 20-25% of pure capital for all banks in a long-term systematic fashion, but coordinated with substantiated reduced regulation, so the industry can be competitive and healthy.
Question: Should money center banks be broken up? (Robert Lenzer, Forbes)
John Allison: Well, my general posture is that I am opposed to any trust. On the other hand, if the government has determined some institutions are too big to fail, then they have to be broken up because it creates huge market distortions, particularly in the good times. Because anybody that has an implicit government guarantee can afford to take dramatically more risk. So what’s going to happen, if we don’t break up the institutions that are too big to fail, then on the next cycle, when the good times comes, they’ll come, they’ll be taking enormous risk and then the next cycle will be a really, a disaster. I personally don’t believe they’re too big to fail. I think they should be allowed to fail and there ought to be a process where they fail just like any other company and then you wouldn’t have to break them up. The capital requirement that I described in the last, answer to the last question, really would help deal very effectively with this issue.
How can we manage banks that may be too big to fail?
If you're lacking confidence and feel like you could benefit from an ego boost, try writing your life story.
In truth, so much of what happens to us in life is random – we are pawns at the mercy of Lady Luck. To take ownership of our experiences and exert a feeling of control over our future, we tell stories about ourselves that weave meaning and continuity into our personal identity.
Researchers hope the technology will further our understanding of the brain, but lawmakers may not be ready for the ethical challenges.
- Researchers at the Yale School of Medicine successfully restored some functions to pig brains that had been dead for hours.
- They hope the technology will advance our understanding of the brain, potentially developing new treatments for debilitating diseases and disorders.
- The research raises many ethical questions and puts to the test our current understanding of death.
The image of an undead brain coming back to live again is the stuff of science fiction. Not just any science fiction, specifically B-grade sci fi. What instantly springs to mind is the black-and-white horrors of films like Fiend Without a Face. Bad acting. Plastic monstrosities. Visible strings. And a spinal cord that, for some reason, is also a tentacle?
But like any good science fiction, it's only a matter of time before some manner of it seeps into our reality. This week's Nature published the findings of researchers who managed to restore function to pigs' brains that were clinically dead. At least, what we once thought of as dead.
What's dead may never die, it seems
The researchers did not hail from House Greyjoy — "What is dead may never die" — but came largely from the Yale School of Medicine. They connected 32 pig brains to a system called BrainEx. BrainEx is an artificial perfusion system — that is, a system that takes over the functions normally regulated by the organ. The pigs had been killed four hours earlier at a U.S. Department of Agriculture slaughterhouse; their brains completely removed from the skulls.
BrainEx pumped an experiment solution into the brain that essentially mimic blood flow. It brought oxygen and nutrients to the tissues, giving brain cells the resources to begin many normal functions. The cells began consuming and metabolizing sugars. The brains' immune systems kicked in. Neuron samples could carry an electrical signal. Some brain cells even responded to drugs.
The researchers have managed to keep some brains alive for up to 36 hours, and currently do not know if BrainEx can have sustained the brains longer. "It is conceivable we are just preventing the inevitable, and the brain won't be able to recover," said Nenad Sestan, Yale neuroscientist and the lead researcher.
As a control, other brains received either a fake solution or no solution at all. None revived brain activity and deteriorated as normal.
The researchers hope the technology can enhance our ability to study the brain and its cellular functions. One of the main avenues of such studies would be brain disorders and diseases. This could point the way to developing new of treatments for the likes of brain injuries, Alzheimer's, Huntington's, and neurodegenerative conditions.
"This is an extraordinary and very promising breakthrough for neuroscience. It immediately offers a much better model for studying the human brain, which is extraordinarily important, given the vast amount of human suffering from diseases of the mind [and] brain," Nita Farahany, the bioethicists at the Duke University School of Law who wrote the study's commentary, told National Geographic.
An ethical gray matter
Before anyone gets an Island of Dr. Moreau vibe, it's worth noting that the brains did not approach neural activity anywhere near consciousness.
The BrainEx solution contained chemicals that prevented neurons from firing. To be extra cautious, the researchers also monitored the brains for any such activity and were prepared to administer an anesthetic should they have seen signs of consciousness.
Even so, the research signals a massive debate to come regarding medical ethics and our definition of death.
Most countries define death, clinically speaking, as the irreversible loss of brain or circulatory function. This definition was already at odds with some folk- and value-centric understandings, but where do we go if it becomes possible to reverse clinical death with artificial perfusion?
"This is wild," Jonathan Moreno, a bioethicist at the University of Pennsylvania, told the New York Times. "If ever there was an issue that merited big public deliberation on the ethics of science and medicine, this is one."
One possible consequence involves organ donations. Some European countries require emergency responders to use a process that preserves organs when they cannot resuscitate a person. They continue to pump blood throughout the body, but use a "thoracic aortic occlusion balloon" to prevent that blood from reaching the brain.
The system is already controversial because it raises concerns about what caused the patient's death. But what happens when brain death becomes readily reversible? Stuart Younger, a bioethicist at Case Western Reserve University, told Nature that if BrainEx were to become widely available, it could shrink the pool of eligible donors.
"There's a potential conflict here between the interests of potential donors — who might not even be donors — and people who are waiting for organs," he said.
It will be a while before such experiments go anywhere near human subjects. A more immediate ethical question relates to how such experiments harm animal subjects.
Ethical review boards evaluate research protocols and can reject any that causes undue pain, suffering, or distress. Since dead animals feel no pain, suffer no trauma, they are typically approved as subjects. But how do such boards make a judgement regarding the suffering of a "cellularly active" brain? The distress of a partially alive brain?
The dilemma is unprecedented.
Setting new boundaries
Another science fiction story that comes to mind when discussing this story is, of course, Frankenstein. As Farahany told National Geographic: "It is definitely has [sic] a good science-fiction element to it, and it is restoring cellular function where we previously thought impossible. But to have Frankenstein, you need some degree of consciousness, some 'there' there. [The researchers] did not recover any form of consciousness in this study, and it is still unclear if we ever could. But we are one step closer to that possibility."
She's right. The researchers undertook their research for the betterment of humanity, and we may one day reap some unimaginable medical benefits from it. The ethical questions, however, remain as unsettling as the stories they remind us of.
A space memorial company plans to launch the ashes of "Pikachu," a well-loved Tabby, into space.
- Steve Munt, Pikachu's owner, created a GoFundMe page to raise money for the mission.
- If all goes according to plan, Pikachu will be the second cat to enter space, the first being a French feline named Felicette.
- It might seem frivolous, but the cat-lovers commenting on Munt's GoFundMe page would likely disagree.
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