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March 31, 2014

The Brilliant Solution to TBTF No One Is Talking About

“The debate over “too big to fail” banks is about to reignite, courtesy of the Federal Reserve Bank of New York.

“On Tuesday, the New York Fed released an insightful series on how U.S. global systemically important banks received a funding advantage before Dodd-Frank and Basel III started being implemented. Moreover, one of its studies found big banks engage in riskier transactions, because they believe the government will not let them fail.

“At the same time, however, the researchers found that breaking up the big banks, would hurt the economy. Unfortunately, taxpayers who have been forced to share the downsides without the upsides remain significantly exposed to the enormous credit, market and operational risks posed by TBTF banks.

“For over a year, I have been analyzing bills that aim to end TBTF. In the current political environment, any bill that advocates breaking up big banks or taxing them has little chance of ever seeing the light of day. However, there is an excellent bill, H.R. 2266, that would go a long way in protecting taxpayers sitting in the office of Michael Capuano, D-Mass. It deserves to be heard by the House Committee on Financial Services.”

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Read full American Banker article here.

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