Interesting comments on the Too Big To Fail (TBTF) debate:
they [the TBTF banks] are unhealthy for the financial system even
when they are healthy. This is because there is a silent subsidy —
an unfair competitive advantage relative to community banks —
inherent in being deemed by the government, implicitly but clearly,
too big to fail.
Is their debt priced favorably because, being TBTF, they are
considered especially creditworthy? Brown believes the 20 largest
banks pay less when borrowing — 50 to 80 basis points less — than
community banks must pay.
The 20 largest banks’ assets total 84.5 percent of the nation’s
gross domestic product.
banks are not only bigger but also “more opaque than ever.” And
regulations partake of the opacity: The landmark Glass-Steagall
Act of 1933, separating commercial banking from investment banking,
was 37 pages long; the 848 pages of the 2010 Dodd-Frank law may
eventually be supplemented by 30 times that many pages of rules.
The “Volcker rule” banning banks from speculating with federally
insured deposits is 298 pages long.
Read detailsAdditionally this TBTF group offers some of the least attractive consumer
deposit products in the industry.
So how about a Deposit Accounts straw poll on this one? I'll start it
off; count me as a yes: Breakup 1, No Breakup 0.
Perhaps Ken will edit in one of his cool, first-class pie charts if there's
enough voting interest.
