bank
Gordon Brown's Financial Shock and Awe
Should We Care About the "Big" in "Too Big To Fail"?
Oftentimes when you debate a skeptic of structural reform on Wall Street, the skeptic will say something like: "Why are you so worked up about 'too big to fail'? Lehman was far from the biggest bank on Wall Street, but it caused plenty of damage." If anything, "too-interconnected-to-fail" is the real issue, they'll say--implying that this makes addressing the problem utterly futile, since severing interconnections is a lot harder than limiting bank size. READ MORE >>
Today in "Too Big To Fail": More Shrinkage Momentum
Could the Economy Survive With Just Medium-Sized Banks?
Josef Ackermann, chief executive of Deutsche Bank and chairman of the Institute of International Finance (an influential group, reflecting the interests of global finance in Washington) is opposed to breaking up big banks. According to the FT, he said, READ MORE >>
‘He Hasn’t Lost Anything Yet’
'Too Big' Banks Won't Disappear On Their Own
That's the conclusion of a new St. Louis Fed study by David Wheelock and Paul Wilson. In the two decades between the mid-80's and 00's, the number of commercial banks fell by 50% while the average size per institution surged by an inflation-adjusted 500%. The problem, systematically speaking, is that banks receive increasing returns for getting bigger. The story behind the rise of big banks seems to be largely driven by technology: READ MORE >>
The Stock Market v. Treasury Yield Paradox, Resolved
The big market paradox of the past few months has been the differing signals coming out of the stock and U.S. Treasury markets. Stock prices have been roaring since early March, up over 50%. That should be a strong signal that economic conditions are on the upswing. But even though today's GDP report does show that the recession may have ended in the second quarter, Treasury yields have remained flat since the spring -- showing that there are some big doubts about the strength of a recovery. READ MORE >>
Can We Fix Too Big to Fail Without Shrinkage?
Dan Tarullo, Regulatory Hero
Yesterday's Wall Street Journal had a pretty encouraging profile of Dan Tarullo, the Obama-appointed Fed governor. Take, for instance, this passage: READ MORE >>
