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May 2, 2013

Simon Johnson: The Case for Megabanks Fails

“The megabank lobby has finally put its best arguments on the table. After years of silly Twitter posts, weak research papers and other forms of unimpressive public relations, those opposed to further financial reform now have serious representation in the debate about what to do regarding too-big-to-fail banks.”

“On April 30, the law firm Davis Polk & Wardwell issued ‘Brown-Vitter Bill: Commentary and Analysis,’ confronting head-on the proposal from Senators Sherrod Brown, Democrat of Ohio, and David Vitter, Republican of Louisiana, that would require bigger banks to fund themselves with more equity (and less debt, relative to their total balance sheet).”

“The Davis Polk document, well written and with clear footnotes to its sources, provides transparency and style, a great improvement over most pro-megabank writing that I have reviewed here over the years. On substance, however, Davis Polk is completely wrong.”

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Read Simon Johnson’s full Economix blog post here.

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