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Submitted by Zeljko Bogetic on
Another issue with the question is that it's too general. My sense of the general answer is similar to Jerry's for reaons having to do with incentives, conflicting objectives, political, and conflict of interest reasons, many of which are inherent to SBs. But I would quibble w the view that this crisis did not reveal (at least in the "perfect storm conditions" of the Great Recession) equally problematic incentives and disastrous results in what was supposed to be a well regulated, transparent, and rules-based private banking system. So it seems to me that we neeed answers to more specific questions: what, really, are the examples of successful SOBs, since failures seem all too well documented? And is this success unambigious and firmly established upon digging deeper? Under what conditions did this 'success' take place? And are these conditions common, crisis-related, or entirely circumstantial? These basic answers, in addition to those from comparative analyses of performance of state vs private banks, could shed light on both specific and general questions in this debate.