Tag Archives: Banks too big to fail

Carney declares Mission Accomplished on banks

Last month Mark Carney, head of the Financial Stability Board as well as governor of the Bank of England, told us that the problem of banks being ‘too big to fail’ had been solved.   If only.   He wants systematically important banks such as HSBC to hold more equity and debt, enough to absorb losses when they come under pressure.   He is pinning his hopes on the new concept of ‘total loss-absorbing capacity’ (TLAC),  which he reckons should be worth between a fifth and a quarter of risk-weighted assets, as sufficient to prevent a taxpayer bail-out at the next financial crisis.   He described this as a “watershed in ending too big to fail”.   However this is declaring Mission Accomplished a bit too soon.   There are grave doubts whether his ‘solution’ is anywhere near adequate.
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