Politics blogger Matthew Yglesias has been reading the textbook Macroeconomics by Krugman and Wells, and comes across this "check your understanding" question:

A con man has a great idea: he’ll open a bank without investing any capital and lend all the deposits at high interest rates to real estate developers. If the real estate market booms, the loans will be repaid and he’ll make high profits. If the real estate market goes bust, the loans won’t be repaid and the bank will fail—but he will not lose any of his own wealth. How would modern bank regulation frustrate his scheme?

Ah, how indeed...

Also, more on the American fair value war, and thoughts on German regulatory arbitrage.