Complexity, concentration and contagion: A comment

► The banking industry is considerably more complex today than ever before. ► Banking regulation has not kept pace with all the complexities of financial innovation. ► Uncertainty about bank solvency was more central to the recent financial crisis than illiquidity. ► GAAP accounting should be replaced with proper risk accounting methods in bank regulations. ► Lags in regulatory reform can create systemic risk; we need more adaptive regulations.