I don't like these banks being as big as they are...[but] to break them up to the point where the remaining units would be small enough so you wouldn't worry about their failure seems almost impossible.Without the option of breaking up the Too Big To Fail banks, the challenge is
... how to make the financial system safer without prompting banks to leave for jurisdictions where regulation is lighter.The pound of cure solutions do not inspire confidence.
The former Fed chairman's concern over the failure to protect taxpayers and the wider economy from the potential failure of large banks was echoed by George Soros, the billionaire financier and philanthropist.
"I certainly consider they haven't addressed the problem correctly," Mr Soros said. "The whole issue of living wills and resolution authorities is not convincing."
... Mr Soros said that authorities had not produced tough enough regulation to ensure that there won't be a need for governments to exercise the implicit guarantee that they would again bail out the financial system in a future crisis.Ultimately, to paraphrase Winston Churchill, regulators are going to do the right thing by fully implementing the FDR Framework after having tried everything else first.
Making all the useful, relevant information available to all market participants in an appropriate, timely manner is the only solution that provides an ounce of prevention. While nothing can eliminate the potential for a future crisis, if market participants have access to this information it is likely to reduce the severity of any future crisis.
Making all the useful, relevant information available to all market participants in an appropriate, timely manner is the only way for the Too Big To Fail competitors to put peer pressure on the "dumbest competitor" to reduce its risk profile.
Making all the useful, relevant information available to all market participants in an appropriate, timely manner is the only way to eliminate the need for bailouts as all market participants will know who is solvent and who is not solvent.