Lately, the "too big to fail" debate has intensified as if only now has an urgent need to find a scapegoat to slaughter emerged. Certainly, the numerous scandals and examples of gross mismanagement at financial institutions invite criticism and derision.
It is critical to have an intelligent and in-depth discussion about whether the top 12 U.S. banks, which make up 70% of all banking assets benefit from government subsidies and bailouts. If we really want to solve the TBTF problem, however, we need to think not just of banks, but of the entire financial sector since all participants – banks, securities firms, hedge funds, private equity firms, insurance companies and mutual and pension funds – are extremely interconnected. All of them can cause systemic risk and negatively impact the economy.
Article Published in American Banker
Comments