Congress needs to get off the dime and create a resolution authority that would break down failed institutions in an orderly manner, since the lack of such an authority is driving policy decisions, according to Sheila Bair, head of the Federal Deposit Insurance Corp.
Speaking at the Reuters Global Financial Regulation Summit in Washington, Bair said that gap has fed into the too-big-to fail presumption and created a dilution in market discipline for those who invest and extend credit to very large institutions.
“We think Congress should give a very high priority to providing a resolution mechanism for very large organizations, Bair said. “The lack of this mechanism is driving policy choices right now.”
Veteran Wall Street banking analyst Richard Bove sees Lehman Brothers surviving — but he doesn’t think they’ll be making a lot of money.
There’s just not a lot of business there at the moment for brokers like Lehman, he told the Reuters Investment Outlook Summit in New York.
To listen to a clip of what Bove had to say, please click here