Fed Calls For Break-Up Of Too Big To Fail Banks
The Dallas Federal Reserve is calling for what would effectively be a break-up of the big banks in an effort to end the Too Big To Fail banking risks. An annual report titled “Choosing the Road to Prosperity” is tagged…
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The white paper noted that the road back to prosperity will require reform of the financial sector. In particular, a new roadmap must find ways around the potential hazards posed by the financial institutions that the government not all that long ago deemed “too big to fail”—or TBTF, for short.
One concern is that the new law may not prevent the biggest financial institutions from taking excessive risk or growing ever bigger. Harvey Rosenblum’s paper notes, “Eliminating TBTF won’t be easy, but the vitality of our capitalist system and the long-term prosperity it produces hang in the balance.”
The paper goes on to note that complacency, greed, and complicity all played individual parts. It also noted that a deep concentration amplified the speed and breadth of the subsequent damage to the banking sector and also to the whole economy.
What is interesting is that this is not all pro-regulation. The paper notes, “The verdict on Dodd–Frank will depend on what the final rules look like. So far, the new law hasn’t helped revive the economy and may have inadvertently undermined growth.”
JON C. OGG
Contact [email protected] for any questions or corrections.
Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.
