While the role of market discipline has been much discussed in academic and policy literature as a potentially central element of a financial regulatory system, it had not been significantly developed and implemented by regulators themselves. The crisis has pushed some market discipline ideas to the fore. Here again, I think there are three important measures.
First would be creation by Congress of a special resolution procedure for systemically important financial firms. The Federal Deposit Insurance Act establishes such a process for banks, but not for the holding companies of which they are part, or for important financial firms that do not own commercial banks.