Statements of Support

Many prominent economists and policymakers have endorsed Limited Purpose Banking or recommended its careful study. Many of these endorsements of the plan were provided in the form of endorsements of Jimmy Stewart Is Dead, a book I published in 2010 about the financial crisis.

Please ignore comments about the book and focus on the comments about the plan. My purpose here is not to advertise the book, but to indicate that Limited Purpose Banking is viewed as a very serious option by many distinguished experts on finance, financial markets, and economic policy. As the identities of the authors of these statements make clear, interest in Limited Purpose Banking spans the political divide.

“In thinking through the deep structural issues associated with the financial crisis, Professor Kotlikoff has raised the level of debate about how to build a robust financial system fit for the next generation”.
-- Mervyn King, Governor of the Bank of England

“Larry Kotlikoff grabs us by the collar, brilliantly unveiling the truth about our financial system: ‘It’s a system virtually designed for hucksters.’ With scintillating arguments, vivid examples, and terrific wit, he shows us a path of powerful reform that would stop banks from gambling and restrict them to their legitimate purpose, ‘connecting borrowers to lenders and savers to investors.’ This is economics at its very best: deeply insightful and powerfully useful. It will change the global debate.”
-- Jeffrey Sachs, Director of The Earth Institute, Quetelet Professor of Sustainable Development, and Professor of Health Policy and Management at Columbia University

“Financial reform needs something simple, clear, and, most of all, effective. Read this book to get and understand the answer.”
-- George Shultz, Distinguished Fellow, the Hoover Institution, former U.S. Secretary of Treasury, and former U.S. Secretary of State

“The economic crisis has forced us to examine the shortcomings of our financial system. In Jimmy Stewart is Dead: Ending the World’s Ongoing Financial Plague Before It Strikes Again, Laurence Kotlikoff argues that trust in the banking system has been broken and that only bold action will restore it. He calls for true transparency and offers thoughtful proposals such as limited purpose banking to help restore trust in the system and to prevent such hardship from occurring again. Every Washington policy maker and public-spirited banker should read this book.”
-- Former United States Senator Bill Bradley

“At last! A real financial page-turner. Kotlikoff calls out the bad actors behind the financial crisis and nails them cold. But he also goes a step further. He tells us how to prevent it from happening again. It’s called Limited Purpose Banking. Anyone can read this book-- and everyone should.”
-- Scott Burns, Financial Columnist, Universal Press Syndicate

“Jimmy Stewart Is Dead is a page-turner, as fast moving as the Simpsons, with new insights on every page. As fun as it is, Jimmy Stewart is also deadly serious. It describes the deep problems of our financial system, with its ubiquitous and dangerous overhangs of different forms of debt. Laurence Kotlikoff prescribes the regulatory and banking overhaul needed to prevent another financial crash. His book should be read by everyone who wants to ensure that such a crisis will never occur again.”
-- George Akerlof, Koshland Professor of Economics, University of California at Berkeley,
Nobel Laureate in Economics

"Larry Kotikoff's book makes an impassioned, coherent, and (to me) convincing case for Limited Purpose Banking."
--- Robert E Lucas, Jr., Professor of Economics, University of Chicago, Nobel Laureate in Economics

“This book is ‘must’ reading for everyone who cares about the future of the American economy. “
--- Robert W. Fogel, Charles R. Walgreen Distinguished Service Professor of American Institutions, The University of Chicago Booth School of Business, Nobel Laureate in Economics

“Kotlikoff is right. Unless we institute fundamental reforms, there will be an even greater crisis than the current one. This well-written book is a must read for those concerned with reforming the financial system.”
-- Edward C. Prescott, W. P. Carey Professor in Economics, Arizona State University, Nobel Laureate in Economics

“Certainly we need to abandon the hazardous financial system we have. Kotlikoff’s Limited Purpose Banking plan, with its ban on borrowing by financial limited liability companies, is one of the best visions to surface so far.
-- Edmund Phelps, McVickar Professor of Political Economy, Columbia University, Nobel Laureate in Economics

“This book is scarier than anything Steven King ever wrote, and just as well written. Distinguished economist, Larry Kotlikoff, has started a new genre, nonfiction economic horror. Kotlikoff knows what happened and why, and has the courage to point fingers and name names. One can not turn the final page without the sense that this book may be our country’s last hope.”
-- Kevin Hassett, Director of Economic Policy Studies and Senior Fellow, American Enterprise Institute and Columnist, Bloomberg News

“The only sure way to avoid another Wall Street meltdown and ensure financial institutions act in ways that serve the economy is to separate the utility function of banking, connecting savers to borrowers, from the investment function of the financial market casino. Laurence Kotlikoff's Limited Purpose Banking proposal is an important and timely step forward.”
-- Robert B. Reich, Professor of Public Policy, University of California at Berkeley, and former U.S. Secretary of Labor

“Larry Kotlikoff is that rare economist who comes up with the most original ideas when the stage is crowded with pedestrian analyses by other economists. He does it again with the current financial crisis. This is a marvelous book that will repay a careful read, even if you are as smart as Larry Summers and Ben Bernanke.”
-- Jagdish Bhagwati, University Professor, Economics and Law, Columbia University

“This remarkable book from Larry Kotlikoff is an invaluable read for all of us who care about our country’s long-term competitiveness. I found it innovative, original thinking with a perspective of great value from a man to whom we should all pay attention.”
--Admiral William Owens, Chairman, AEA Holdings Asia and former Vice Chairman of the Joint Chiefs of Staff

If Michelin gave out stars to economists, Larry Kotlikoff would get three of them – worthy of a detour. Mixing villains, wit, and wisdom, “Jimmy Stewart is Dead” is a great read with a serious message. Kotlikoff makes a compelling case for regulation that would restructure the banking system to limit banks to their basic functions, and he shows how doing so would allow market forces to make the next financial crisis less likely and less severe. This is a desperately needed antidote to the spate of proposed reforms from the usual pundits that amount to nothing more inspired than a call for more regulation without a recipe for smarter regulation. Iconoclastic but practical, Kotlikoff is one of the most creative economists of his generation and one of its premier policy analysts. It would be folly not to listen to him.
--Stephen A. Ross, Franco Modigliani Professor of Financial Economics, MIT

“Informative, Infuriating and Insightful. If you think you understand the extent of the malfeasance by Wall Street and by our Federal Government, you are in for a rude shock when you read this book. Larry Kotlikoff understands the scope of the problems we face better than any economist I know; he uses clear, accessible and lively prose; best of all, he offers an innovative and provocative solution to this gargantuan problem. Send copies of this book to your representatives in Washington!”
--- Edward E. Leamer, the Chauncey J. Medberry Professor of Management and Professor of Economics and Professor of Statistics, University of California Los Angeles

“This is provocative and hard-hitting analysis. A leading academic economist takes off the gloves and goes a hard eight rounds with finance-as-we-know-it. The result is a fresh and clear proposal for reducing the risks that arise as people with savings provide funding to people making productive investments in any economy. If we implement Professor Kotlikoff’s ideas – or any close approximation – the U.S. can continue to generate entrepreneurship, growth, and jobs, without repeatedly having to bail out our big banks. This is beyond appealing; it is compelling.”
--Simon Johnson, Professor of Entrepreneurship at MIT Sloan, former Chief Economist at the International Monetary Fund, and co-author of 13 Bankers

“Larry Kotlikoff has been consistently ahead of the curve in the debate on America’s coming fiscal breakdown. Now he turns his attention to the financial crisis that threatens to bring that fiscal breakdown forward to, well, quite possibly this year. I was wholly persuaded by the case he makes for Limited Purpose Banking. It is clearly the best available remedy for the present appalling state of affairs, in which highly leveraged “too big to fail” institutions can expect taxpayers to pick up the multi-trillion-dollar tab when their gambles go wrong.”
--Niall Ferguson, William Ziegler Professor of Business Administration at Harvard Business School and author of The Ascent of Money

“Kotlikoff provides a marvelously clear explanation of how today’s financial system really works, stripping away all the obscure jargon. At the same time, the book is a passionate and strongly worded indictment of the system and a blueprint for how to fix it from the ground up. Kotlikoff’s basic thesis: that today’s financial institutions have become tax-payer subsidized casinos increasingly divorced from the basic intermediation activities society expects them to perform – is hard to refute.”
-- Kenneth Rogoff, Thomas D. Cabot Professor of Public Policy and Professor of Economics, Harvard University, former Chief Economist at the International Monetary Fund, and co-author of This Time is Different

“I always make time in my busy schedule to read anything Larry Kotlikoff writes. You should too. Why? He is always insightful in his analysis, provocative in his predictions and creative in his proposed solutions. In Jimmy Stewart Is Dead, Kotlikoff lays open the fundamental fissures in the financial system and presents a radical solution: limited purpose banking, an idea related to proposals during the Great Depression by renowned American economists Frank Knight and Irving Fisher. When I was helping clean up the last American financial crises – the Savings and Loans mess and the Latin American debt fiasco for the big money center banks – I lamented the dearth of creative policy thinking before they struck. Policymakers, investors, taxpayers and all concerned citizens will find much to mull over in this readily accessible book.”
--- Michael J. Boskin, T.M. Friedman Professor of Economics and Senior Fellow, Hoover Institution, Stanford University, Former Chairman, President’s Council of Economic Advisors, 1989-1993

"Laurence Kotlikoff is one of the original thinkers of our time. Even if you don't agree with his specific proposals, Larry's new book -- with the provocative title, Jimmy Stewart is Dead -- is likely to lead you beyond the conventional ways of dealing with the economic challenges facing our country."
-- Murray Weidenbaum, Edward Mallinckrodt Distinguished University Professor and Professor of Economics, Washington University in St. Louis, Former Chairman, President’s Council of Economic Advisers

"This book is heaps of fun. But it is entirely serious, and comes at the right time. The profound change – Limited Purpose Banking, which Kotlikoff recommends and that we desperately need, could only be undertaken now that we’ve seen the full dangers of maintaining the current financial system. Kotlikoff entertains with great energy while instructing using facts made for fiction. To understand the most effective changes we can make to truly fix our financial system, read this book."
-- Susan Woodward, Principal, Sand Hill Econometrics and former Chief Economist of the U.S. Securities and Exchange Commission and former Chief Economist of the U.S. Department of Housing and Urban Development

“Our financial system puts us all at risk. This book shows that it doesn't have to be this way. We can have all the benefits of a modern economy without having crises like the last one. Or if policy makers don't listen, like the next one. And the next ...”
-- Paul Romer, Senior Fellow at Stanford Center for International Development (SCID) and Stanford Institute for Economic Policy Research (SIEPR), Stanford University

"This book grips like a novel. But, it's no work of fiction. It's our actual financial horror story in which we face ongoing economic torture at the hands of greedy bankers, incompetent regulators, and corrupt politicians. The book is a penetrating and painless (indeed, fun) education as well as a saving grace. It offers the only clear path to economic salvation -- forcing banks to do the one and only thing they are here for-- financial intermediation.”
-- Christophe Chamley, Professor of Economics, Boston University

“If the Crash caused you to fear for your job, your retirement, and for the future of your children, read this book. You will be led by one of America's most eminent economists through a blow-by-blow account of what happened and why, and there will be times you will feel like running to the window to shout out your outrage and call for change. Kotlikoff's proposal for Limited Purpose Banking calls for the most radical overhaul of banking legislation since the Great Depression.”
-- Uri Dadush, Senior Associate and Director of International Economics, Carnegie Endowment for International Peace and former Director of International Trade and Director of Economic Policy at the World Bank

"Forget narrow banking concepts. Professor Kotlikoff forces us to consider Limited Purpose finance, and does so with humor and enlightenment."
---Robert R. Bench, Senior Fellow at Boston University School of Law, and formerly Deputy U.S. Comptroller of Currency

“Larry Kotlikoff has written a fascinating book. It is a must read for everyone who wants to understand the current financial crisis and what we can do about it.”
-- John C. Goodman, President & CEO, National Center for Policy Analysis

“Larry Kotlikoff has written a provocative, entertaining and well-written book analyzing how our financial crisis arose and how to fix it permanently. In some ways the last twenty years seem like a return to the 1800s, with financial instability driving the business cycle. Professor Kotlikoff tells us why, and how to fix it. Anyone interested in finance, options, long-term contracting, banking and financial and macroeconomic policy must read this book, and it is a good read for the individual investor as well. His Limited Purpose Banking financial fix is critically important to our future prosperity."
--- R. Preston McAfee, Vice President and Research Fellow, Yahoo! Research and former J. Stanley Johnson Professor of Business Economics and Management, California Institute of Technology

“This is an entertaining romp that explains our recent not-so-entertaining financial calamity. Whether or not you agree with Kotlikoff’s policy prescription, you must admit that it’s provocative.”
--- Rudolph G. Penner, Institute Fellow, Urban Institute, former Director of the Congressional Budget Office

“Kotlikoff lays bare the fault lines of traditional banking and makes a compelling case why ‘limited purpose banking’ should be part of the reform discussion.”
-- Professor Cornelius Hurley, Director of the Morin Center for Banking and Financial Law at Boston University, formerly Assistant General Counsel to the Federal Reserve Board

“Kotlikoff is a distinguished scholar with a passion for addressing the big issues. His previous books for the general public dealt with tax reform, Social Security, health care, federal deficits and intergenerational equity. In each case he demonstrates analytical clarity, political independence, and a lively and entertaining writing style. Now he has turned his attention to the financial crisis and once again offers fresh insights and sensible proposals. I recommend this book to independent thinkers of good conscience, no matter what their political affiliation.”
-- Zvi Bodie, Norman and Adele Barron Professor of Management, Boston University

“Kotlikoff makes a strong case for ‘Limited Purpose Banking’ as the best protection against the next financial crisis. I worry most about his proposal for replacing all current federal and state financial regulatory agencies with one massive federal financial authority; this authority, I suggest, would increase the scope of regulatory mistakes and the prospect and capability of the federal government to allocate credit for political objectives. I encourage readers of this book to make your own judgment about the regulatory environment that would best complement limited purpose banking.”
-- William A. Niskanen, Chairman Emeritus of the Cato Institute and former Acting Chairman and Member of the President’s Council of Economic Advisers

"This is a must read for everyone who wants to know not only what went wrong but how to fix it. Kotlikoff has brilliant answers to the most important questions in economics today."
--Anna Bernasek, economic journalist and author of The Economics of Integrity

“Laurence Kotlikoff has produced an entertaining and insightful analysis of the great credit crisis and the ailments of the U.S. financial system. This sets the stage for some radical proposals to change the structure of the financial intermediation. In his view triage is not enough – what is required is radical reconstructive surgery. Whether you view his recommendations for Limited Purpose Banking as politically viable or not, his analysis goes to the heart of the important flaws that have to be confronted if we are to reduce the likelihood of crises in the future. This book is essential reading for those interested in the perils of financial intermediation in the modern world.”
-- Thomas F. Cooley, Dean and the Paganelli-Bull Professor or Economics, New York University Stern School of Business

“Kotlikoff understands markets and market makers. And he understands economics. He vividly diagnoses the financial plague, and he argues that, as is, the system is unsafe at any speed. His remarkably simple cure does not rely on a dying breed--honest bankers like Jimmy Stewart (aka George Bailey), but on limiting banking to its only honest purpose --financial intermediation.”
-- Herakles Polemarchakis, Professor of Economics at the University of Warwick

Larry Kotlikoff provides a poignant, accessible and engaging account of how distorted incentives, leverage, and risk played a major role in the financial crisis. He also confronts us with a scary account of the government deficits that will come to haunt us or our descendants. Kotlikoff’s ideas for how to change the banking system are thought provoking. This book forces us to step back and think about the basic purpose of financial institutions, and whether there is a better way to organize them.
-- Anat Admati, George C.G. Parker Professor of Finance and Economics, Graduate School of Business, Stanford University

"Many doubt whether proposed regulatory reforms regarding capital requirements will be effective in reducing the excessive risks taken by banks and other financial institutions. Larry Kotlikoff offers a more fundamental solution called "Limited Purpose Banking (LPB)", in which banks connect borrowers to lenders and savers to investors without taking on risk. This radical idea, challenging the existing structure of all financial institutions, deserves to be at the center of the post-crisis debate. Economists and practitioners alike will find this a compelling book".
-- Eytan Sheshinski, Sir Isaac Wolfson Professor of Public Finance, Department of Economics, The Hebrew University