Subordinated debt as bank capital: A proposal for regulatory reform
Douglas D. Evanoff, Larry D. Wall
Industry observers have proposed increasing the role of subordinated debt in bank capital requirements as a means to increase market discipline. A recent Federal Reserve System Task Force evaluated the characteristics of such proposals. Here, the authors take the next step and offer a specific sub-debt proposal. They describe how it would operate and what changes it would require in the regulatory framework.
