Professor Edward Kane:

It is certainly an indictment of the failure to completely design the system. The ability, say of the European Central Bank, to absorb losses is limited by the ability to recapitalise itself from the member states. In addition, the fact that they have never established a formal loss allocation mechanism and are just "winging it", to use that term, is part of the problem.

It took the United States a long time before we had the Federal Deposit Insurance Corporation. I think the aspirations of European unity have run ahead of the institutions that are supposed to support and embody it and this is just one example of that. I appreciate the Senator quoting my paper. It was a matter of being an analysis and was not so much a forecast. It had to be that way. If one does things incompletely then one must unravel problems in an ad hoc way.