@vvs. interesting opinions and I'd like to attempt to contribute to this topic. But firsly could you explain that statement further...
What folks do NOT realise is that the 'restrictions' on Kenya banks also caused high inflation & low economic growth.

Unfortunately I'm one of dem folks. And as for the Kenyan shylocks, how do they tie in to that statement above.

I don't understand what you mean that Fannie Mae & Freddie Mac caused the problems in housing as far being guaranteed by Congress. Who regulated the FMs? As I understand (from what I read) they provided liquidity through CMBS as well as a self-regulating mechanism to mortgage lenders...i thot this system worked well, but the degeneration of these standards were accelerated by the banks that assumed that role (in collusion with ratings agencies & urged on by the Fed)...so doesn't selah's point on liberalization make sense (less the China comparison).

If a deregulated banking system creates economic growth and low inflation, historically, why have any bailouts at all...if the judge of prosperity is low savings rate, but high standard of living dependent on a spendthrift mentality then, somebodies got to pay for (what the austrians call) the unwinding the malinvestments. High risk, high reward model seems unsustainable, and not every1 can do it at the same time. but a lot can be done to make the Kenyan banking system more efficient...my 2 cents.

@scubidu - Bailouts are a Moral Hazard... They generally benefit the profligate & punish the cautious!

As for the FMs... u can read the stuff online... It is too much to explain here... I cant start typing it all out... and I do not have the time either!

@scubidu - Great reading, huh?

Essentially, the FMs became too huge & the political clout was immense... Warren Buffett warned about them...

I actually think those saying there are differences in banking regulation between Kenya and US are missing the boat completely. Au contraire, there are similarities. Like in the US, the Kenyan banking regulators have been captured by GoK and banks and merely operate at their whim. Can u see Ndungu ever closing down any bank let alone Equity or KCB?

Where there are differences and what has saved the Kenyan banking system, is that we have a very simple banking model and Kenyans are not yet at the same "borrow and spend" levels that the fat Americans are at.

@Ric Dees - IMHO... Kenya lucked out... not coz conservative but under-developed...