This paper published last Sunday at voxeu.org makes a worthwhile suggestion that would improve President Obama's proposed tax on banks too big to fail.

Rather than indiscriminately tax all uninsured liabilities of banks of a certain size, as Obama's proposed levy would do, the tax proposed by Enrico Perotti, a professor of international finance at the Amsterdan Business School, would fall on short-term ones, thereby reducing banks' leverage and improving their liquidity.

That would also have the effect of restraining their proprietary trading and other riskier activities, as the so-called Volcker Rule that has run into opposition in Congress is designed to do, and thus be a more effective means of preventing the banks from posing systemic risk than a flat tax on liabilities would be.

"This approach exempts insured deposits and targets the risk of sudden withdrawals of wholesale funding, which was the engine of the last crisis," Perotti wrote. "Critically, our tax is sharper for shorter-term funding and decreases to zero for medium-term liabilities that do bear risk. In other words, it targets the externality caused by funding fragility and offers strong incentive effects in good times."

The idea also happens to be in line with the suggestion by the head of the Bank for International Settlements, a Switzerland-based bank owned by central banks, that private banks be required to raise more equity and retain more earnings for purposes of improving their liquidity.

"Banks should hold a sufficient stock of high-quality liquid assets to be able to survive a month-long loss of access to funding markets," Jaime Caruana wrote in a paper presented at a conference of central bankers on Tuesday, according to Bloomberg.

Or, as Yves Smith put it in her post on the topic, "Simple and slow banking is, of course, less profitable in good times than the kind we've had over the last two decades. But banks were kept comfortably profitable and low risk via strict regulation for nearly five decades without having a major crisis (from the 1930s through the sovereign lending mess of the late 1970s)."

Of course, the bank lobby will push back against both of these suggestions by every means possible. But a guy can dream, can't he?