During the recent credit crisis, U.S. banks in urgent need of capital quickly received
bailout funds from a government fearful of a systemic collapse.
As a way of avoiding the next financial debacle and the consequent socialization of losses, banks should be required to avoid becoming undercapitalized in the first place.
Before providing banks with public funds and putting the taxpayer at risk, the government should require that troubled lenders help themselves by raising capital from their own stockholders through coercive rights.
Read the full opinion editorial at Bloomberg.com.