I’ve been torn on this question. On the one hand, if largeness confers implicit and distorting powers to banks (this is the worry behind Too Big to Fail), then by allowing banks to grow without bound, we encourage them to take on cheaper risk. On the other hand, we’ve had small bank calamities before (the Savings and Loan crisis, for example). Lehman Brothers was not a huge bank and its collapse triggered a worldwide financial catastrophe.<\/p>\n
My NY friend will be gratified to see this piece from Vox<\/a> that warns: “A world with only small and domestic banks is no safer. The key A view shared by many has gradually emerged during the crisis, that But this would be a superficial view of the current events. A friend and source in the finance industry in New York has repeatedly made the argument to me that regulators focusing on the size of banks are missing the point. “Small banks did the worst in this crisis,” he once wrote to me. “Making banks smaller would not have changed a thing. If you have […]<\/p>\n","protected":false},"author":1534,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-578538","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/578538","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1534"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=578538"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/578538\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=578538"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=578538"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=578538"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nbenefit of multinational banks – being able to mobilise funds across
\ncountries – could still be extremely useful for maintaining stability
\nin times of distress.<\/em>“<\/em><\/p>\n\n
\na world with relatively small domestic banks is safer than one where
\nlarge global institutions are also important players. This is
\nunderstandable, given that many of the financial firms that had to be
\nbailed out or supported with public funds in 2008 and 2009 in Europe
\nand in the US were multinational banks and that the size and the scope
\nof the activities of these banks have partly been at the root of the
\nsystemic nature of the financial turmoil (see for example Gros and
\nMicossi 2008).<\/p>\n
\nInstitutions with regional or national frameworks of action also had to
\nbe supported because of bad investment policies. Examples include
\nNothern Rock in Britain and WestLB in Germany. Moreover, the key
\n“raison d’\u00eatre” of multinational banks – i.e. being able to mobilise
\nfunds across countries – could in principle be extremely useful to
\nsupport global operations in times of distress and not necessarily be a
\ncause of instability.<\/p>\n<\/blockquote>\n
\n
\n 
<\/a>
\n 
<\/a>
\n 
<\/a>
\n 
<\/a>
\n 
<\/a>
\n 
<\/a>
\n 
<\/a>
\n
\n<\/a>
\n
\n
\nFinancial services<\/a> – Bank<\/a> – Germany<\/a> – Lehman Brothers<\/a> – Business<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"
![\"\"](%22http:\/\/pixel.quantserve.com\/pixel\/p-8bUhLiluj0fAw.gif?labels=pub.29959.rss.TechBiz\n.33822,cat.TechBiz\n.rss\"\/)