Too-big-to-fail rules make banking less global

November 9, 2015

New guidelines will force lenders to hold big buffers of capital in their overseas arms. American and European banks can phase in their bail-in needs, and big Chinese groups no longer get off scot-free. Even so, the regulatory regime looks set to be another balkanising force.

Review: The slow, painful grind to safer banks

June 1, 2015

It’s now received wisdom that America can’t afford to forget financial crises. Veteran FDIC bank examiner John Bovenzi manages to corral the evidence in a surprisingly readable book, joining the dots from the 1980s S&L rout to the start of too-big-to-fail and subprime stupidity.

Wells Fargo: first big bank simple enough to fail

November 26, 2014

The $1.6 trln lender secured a provisional stamp of approval from regulators for its living will. Less credible plans from 11 other titans suggest size isn’t the issue. Wells ranks fourth in assets and first in market cap. The real problems are complexity and interconnectedness.

Global bank capital rules add “G-Sifi envy” to mix

December 20, 2011

Labeling 29 lenders as globally systemic will introduce a new dynamic to finance in 2012. Banks on the list must hold more capital, yet gain a too-big-to-fail halo. Smaller competitors may try to join the club. It’s a race to the top, but not in the way regulators envisaged.

Dodd-Frank opponents return to the drawing board

May 14, 2012

JPMorgan’s prop-like $2 bln trading flub gives ammo to proponents of more stringent bank oversight. Yet Mitt Romney and many in the GOP have promised to gut Dodd-Frank and Volcker. One tactic may be to embrace Dallas Fed President Richard Fisher’s call to make banks smaller.

“Too big to fail” will get partial cure in 2011

December 23, 2010

The "too big to fail" problem will be partly fixed in 2011. But eliminating the taxpayer guarantee enjoyed by large lenders will require more fundamental measures. That will take years to achieve.

Too big to fail worth $30 billion a year to big banks

March 29, 2010

No wonder banks like being too big to fail. The certainty of a bailout, should their bets go wrong, isn’t just reassuring to risk-taking employees. Customers also value infallibility. Measured by the interest rates banks of different sizes pay on deposits, America’s ten biggest banks benefit from this unfair subsidy to the tune of some $30 billion annually.

from Rolfe Winkler:

If banks can delay, pray

November 24, 2009

The "too-big-to-fail" amendment offered by Representative Paul Kanjorski has good intentions, but fatal flaws. One is a section that gives systemically dangerous institutions (SDIs) the right to appeal regulatory orders in a federal district court. If they don't like the corrective actions that regulators instruct them to take, they could delay them indefinitely.

from Rolfe Winkler:

Shock and awe the TBTF

November 23, 2009

For all the fear that bankers have expressed about Representative Paul Kanjorski's amendment to end "too big to fail," the final text shows that they don't have much to fear. While the amendment gives regulators new power, it's unlikely they'd actually use it.