More skin in the game...

I liked this guy's ideas. 6 simple steps to fix the financial system, By Allan Sloan...

...1. Demand more skin in the game. Any reform plan worth its salt should greatly increase capital requirements -- the amount of money that stockholders have at risk, relative to an institution's assets -- for financial institutions. This is what people mean when they talk about reducing leverage. Lower leverage would make institutions less likely to fail, and any bailout of them less expensive.

Our most recent financial crisis, in which a relative handful of U.S. mortgages metastasized into a worldwide financial cancer, started with loans in which borrowers had nothing or almost nothing at risk. Neither did the companies that made the loans and sold them to other companies that bundled them, turned them into securities, and sold the securities to investors. At the end, these players walked away at little or no cost to themselves from the mess they had created, and stuck investors -- and society as a whole -- with a huge cost.

The fix? First, require any institution that turns loans into securities to keep at least 5% of each issue in its portfolio. Second, require a cash down payment from the homebuyer's own resources of at least 10% for any mortgage that's sold as part of a security or package of loans. (Lenders could make and hold lower-down-payment loans, but not sell them as securities.)...

...2. Increase the Fear Factor. If any financial institution fails or needs extraordinary help from the government, the government should be able to claw back five years' worth of stock grants, options profits, and cash salaries and bonuses in excess of $1 million a year. That would apply to the 10 top executives, current and former, with a five-year look-back period. It would also apply to board members, present and past. (People brought in by regulators for rescues that ultimately fail would be clawback-exempt.) ...

These are basically ideas that work by giving people very good reasons to police themselves. Instead of creating more bureaucrats to police them. They are a sort of marketplace-type incentive.