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##uance may also result in lower spreads as the market ’ s familiarity with the issuers increases. this would, of course, reduce the cost of a subordinated debt requirement. on the other hand, a lower required frequency of issuance may allow banks to signal their financial condition through their timing of issuance. flexibility with respect to issuance may also allow banks to avoid the unnecessary cost of issuing subordinated debt during periods in which the bond market is turbulent. on balance, a mandated frequency of once or twice a year would seem reasonable, and would be in line with current practice for larger banking organizations. should subordinated debt with standardized characteristics be required? there are also tradeoffs associated with requiring banking organizations to issue a standardized debt instrument with the same maturity, option characteristics, and covenants. the benefit of standardized debt is fairly obvious. it makes it easier for market participants to decipher the signals of a banking organization ’ s condition. the costs are also pretty clear. a standardized debt instrument could be more costly for some banks to issue than for others because bank capital structures differ across organizations. and, a standardized debt instrument may be very costly during certain market conditions. for example, in periods of actual or expected interest rate volatility, spreads on debt without put options may be relatively high. i would expect that the benefits of standardization in ensuring a purer signal about the relative risk of different banking institutions would outweigh the costs associated with such a restriction. should put options be required? some proposals have advocated that the required subordinated debt have put options. these options have been suggested for two reasons. first, they would provide debt holders with a powerful tool for increasing the cost of bank risktaking. with a put option, debt holders would be able to force early repayment of debt when a bank changed its risk profile. second, under some proposals, put options take the closure decision out of the hands of the regulators and place it in the hands of the debt holders. not coincidentally, these proposals arose in the wake of the savings and loan crisis during which regulators were criticized for their forbearance. put options may also increase indirect discipline if they trigger supervisory actions. as disciplinary as they may be, there are strong arguments against the inclusion of put options. first, the exercise of put options can be extremely draconian, inducing liquidations and possibly premature closures. second, the high correlation of risks across banks may induce a simultaneous exercise of put options, which could