Responding to the very real issues brought to light by the recent financial crisis, the FDIC’s Sheila Bair has made some tough but fair recommendations regarding ‘too-big-to-fail’ banks and investment firms. So, of course, she’s about to be hammered. Or, worse, completely ignored.
“America’s big international banks should restructure their operations unless they can prove they can easily be broken up if they start toppling during a financial crisis, said U.S. regulator Sheila Bair.
“If they can’t show they can be resolved in a bankruptcy-like process… then they should be downsized now,” said Bair, chairman of the Federal Deposit Insurance Corp.
“There is no reason in the world why they should get some special treatment backstop that other businesses in this country don’t have,” Bair said.
“By year’s end, big banks are expected to file with regulators their plans that would show how they can be closed down if they face a liquidity crisis.”