Tuesday, October 06, 2009
Sheila Bair
America’s most powerful woman believes even the most powerful financial institutions should be allowed to collapse. Sheila Bair, head of the Federal Deposit Insurance Corporation, reiterated her earlier assertions at an international conference last Sunday that the current “too big to fail” (or TBTF) doctrine of the U.S. government needs to go, in order to do away with the “shadow banking system that operates outside the reach of regulators.” Bair added the list of institutions that should not be propped up by the government must include insurance companies and hedge funds.
“We need to end ‘too big to fail,’ and this needs to be an overarching policy that applies to everyone,” Bair told those attending the Institute of International Finance meeting.
In addition to eliminating the TBTF doctrine, banks and other financial firms should be required to publish on their websites “living wills” which detail how they would “wind down” their operations in the event of failure, for the benefit of shareholders and consumers.
-Noel Brinkerhoff
"Too Big to Fail" Must End For All: FDIC Chief (by David Lawder, Reuters)
The Most Powerful Woman in America: Sheila Blair (by Noel Brinkerhoff, AllGov)
The Value of the “Too Big to Fail” Big Bank Subsidy (by Dean Baker and Travis McArthur. Center for Economic and Policy Research)
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