Ending “too big to fail” — the idea that some financial institutions are so large that the government would bail them out rather than risk the damage to the financial system that would result from their demise — was a key goal of the 2010 Dodd-Frank financial reform law.
In remarks delivered before the Pew Charitable Trusts in Washington on Thursday, Treasury Secretary Jacob Lew said he thought the U.S. may have met that aim.
“Earlier this year, I said if we could not with a straight face say we ended ‘too big to fail,’ we would have to look at other options,” he said. “Based on the totality of reforms we are putting in place, I believe we’ll meet that test.”
But in the remainder of his remarks, which reviewed the steps the administration has taken since the financial crisis to ward off the next one, Lew said that constant vigilance — and well-funded regulators — would be necessary to spot future threats.
“To be clear, there’s no precise point at which you can prove with certainty that we’ve done enough,” he said of “too big to fail.” “If in the future we need to take further action, we will not hesitate.”
Some say additional steps are necessary now. Last month, Sens. Sherrod Brown, D-Ohio, David Vitter, R-La., and Carl Levin, D-Mich., sent a letter to financial regulators urging them to adopt stronger leverage requirements for big banks.
“Despite receiving assistance from taxpayers in 2008, today, the nation’s four largest banks — JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo — are nearly $2 trillion larger today than they were before the crisis. Their growth has been aided by an implicit guarantee — funded by taxpayers and awarded by virtue of their size — as the market knows that these institutions have been deemed ‘too big to fail,’ ” their offices said in a statement.
Regulators are expected to vote on a final version of a regulation banning banks from making speculative bets with their own money, known as the “Volcker Rule,” next week. It is a core provision of the Dodd-Frank law, and Lew has pressed the five agencies charged with writing the rule to finish it by the end of 2013.
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Much has been made of David Brooks’s recent New York Times column, in which confesses to missing already the civility and humanity of Barack Obama, compared to who might take his place. In NewYorker.com, Jeffrey Frank reminds us how critical such attributes are to foreign policy. “It’s hard to imagine Kennedy so casually referring to the leader of Russia as a gangster or a thug. For that matter, it’s hard to imagine any president comparing the Russian leader to Hitler [as] Hillary Clinton did at a private fund-raiser. … Kennedy, who always worried that miscalculation could lead to war, paid close attention to the language of diplomacy.”
“We haven’t seen a true leftist since FDR, so many millions are coming out of the woodwork to vote for Bernie Sanders; he is the Occupy movement now come to life in the political arena.” So says Bill Maher in his Hollywood Reporter cover story (more a stream-of-consciousness riff than an essay, actually). Conservative states may never vote for a socialist in the general election, but “this stuff has never been on the table, and these voters have never been activated.” Maher saves most of his bile for Donald Trump and Sarah Palin, writing that by nominating Palin as vice president “John McCain is the one who opened the Book of the Dead and let the monsters out.” And Trump is picking up where Palin left off.