Commentary: Contingent capital rules should be considered

05/26/2010 | CNNMoney

"Systemically important financial institutions" should be required to issue so-called "contingent capital" as a cushion against future market meltdowns like those caused by problems at Lehman Brothers, AIG and Fannie Mae, Kenneth A. Posner writes in a Fortune commentary for CNNMoney.com. "Contingent capital could be a special kind of debt that automatically converts to common stock when the firm's regulatory capital gets depleted. In the current political maelstrom, and despite all the self-congratulating on the much-needed financial regulatory reform package that was just passed by the Senate, this practical idea hasn't gotten the attention it deserves," Posner writes.

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