Over the last three years, oceans of ink (or bytes) have been expended on articulating schemes to solve the conundrum of “too big to fail” banks. But a new report by the UK's Independent Banking Commission casts serious doubt on the main proposals for reform.
LONDON – Over the last three years, oceans of ink (or bytes) have been expended on articulating schemes to solve the conundrum of “too big to fail” banks. Many academics and pundits have castigated regulators and central bankers for their inability to understand the obvious attractions of so-called “narrow banking,” a restoration of Glass-Steagall-era separation of commercial and investment/merchant banking, or dramatically higher capital requirements. If only one of these remedies were adopted, the world would be a safer and happier place, and taxpayers would no longer be at risk of bailing out feckless financiers.
LONDON – Over the last three years, oceans of ink (or bytes) have been expended on articulating schemes to solve the conundrum of “too big to fail” banks. Many academics and pundits have castigated regulators and central bankers for their inability to understand the obvious attractions of so-called “narrow banking,” a restoration of Glass-Steagall-era separation of commercial and investment/merchant banking, or dramatically higher capital requirements. If only one of these remedies were adopted, the world would be a safer and happier place, and taxpayers would no longer be at risk of bailing out feckless financiers.