Walter Bagehot

Any serious program for Wall Street reform should start with two words: “term out.” “Terming out” is a financial term of art, but its meaning is easily grasped. It simply means funding your business with long-term financing instead of short-term IOUs. To a far greater extent than is commonly understood, our financial sector funds its operations with extremely short-term borrowings. These IOUs must be paid back in a day, a week, or a month. By contrast, termed-out financial firms shun borrowings that come due in less than a year.

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Some three years ago I wrote an article in the Saturday Evening Post on the English Monarchy. It aroused, at the time, a good deal of controversy and abuse, and even now I am occasionally asked whether I think Princess Margaret ought to have married Group Captain Townsend, or whether the Duke of Edinburgh is a good husband, as though I were some kind of expert on such questions. This is far from being the case. My knowledge of the Royal family is confined to what appears about them in newspapers and magazines.

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