Following on from the previous post, I agree with Andrew McG (and others) that government regulation is unlikely to prevent the next bubble. Thus if I were in charge, in my infinite wisdom (again, see previous post), I would do the following:

1. Give the central bank a more meaningful measure of inflation to target (e.g. RPI instead of CPI).
2. Make dividends tax deductable, or else abolish corporate tax altogether, to avoid the tax advantage of debt over equity financing.
3. Increase the capital reserve requirements. Given the current situation the banks are in, do this progressively, say 0.5% or 1% per year.
4. Try to remember to stop 3 when they get to about 25% or so.
5. Remove any stupid laws that prevent banks from properly pricing the risks of the loans they make (e.g. the US CRA).
6. Some have suggested that in a Northern Gravel situation, the BOE and/or the Treasury should have been able to do a quiet, private rescue, so as not to panic the depositors, who would then make the situation worse. Banking being all about confidence, etc. I disagree. We (depositors, shareholders and taxpayers) cannot act rationally if serious matters are hidden from us. Any intervention in a failing bank should be done with the maximum publicity and hence the maximum humiliation for the banks management (present and past as appropriate). The solution for the management is therefore to ensure that their bank never requires help, under any market conditions.
7. The multi-million $ payoffs show that falling on one’s sword is a lost skill. Perhaps The Operative could be persuaded to run some training classes.