If we have learned one lesson from the financial crisis, it is that the bigger the bank, and the more risk-taking that big banks are allowed to engage in, the greater the threat to our economies and our societies. That is why we need a multi-prong approach, including special taxes, increased capital requirements, tighter supervision, and limits on size and risk-taking activities.
NEW YORK – A global controversy is raging: what new regulations are required to restore confidence in the financial system and ensure that a new crisis does not erupt a few years down the line. Mervyn King, the governor of the Bank of England, has called for restrictions on the kinds of activities in which mega-banks can engage. British Prime Minister Gordon Brown begs to differ: after all, the first British bank to fall – at a cost of some $50 billion – was Northern Rock, which was engaged in the “plain vanilla” business of mortgage lending.
The implication of Brown’s observation is that such restrictions will not ensure that there is not another crisis; but King is right to demand that banks that are too big to fail be reined in. In the United States, the United Kingdom, and elsewhere, large banks have been responsible for the bulk of the cost to taxpayers. America has let 106 smaller banks go bankrupt this year alone. It’s the mega-banks that present the mega-costs.
The crisis is a result of at least eight distinct but related failures:
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The credibility of all external actors in the Libyan conflict is now at stake. The main domestic players will lower their maximalist pretensions only when their foreign supporters do the same, ending hypocrisy once and for all and making a sincere effort to find room for consensus.
Two recent books exploring the history of American venture capital shine a spotlight not just on the workings of the innovative process, but also on the unique personalities behind it. Without VC, the state, and entrepreneurs working in concert, there would be no digital revolution.
NEW YORK – A global controversy is raging: what new regulations are required to restore confidence in the financial system and ensure that a new crisis does not erupt a few years down the line. Mervyn King, the governor of the Bank of England, has called for restrictions on the kinds of activities in which mega-banks can engage. British Prime Minister Gordon Brown begs to differ: after all, the first British bank to fall – at a cost of some $50 billion – was Northern Rock, which was engaged in the “plain vanilla” business of mortgage lending.
The implication of Brown’s observation is that such restrictions will not ensure that there is not another crisis; but King is right to demand that banks that are too big to fail be reined in. In the United States, the United Kingdom, and elsewhere, large banks have been responsible for the bulk of the cost to taxpayers. America has let 106 smaller banks go bankrupt this year alone. It’s the mega-banks that present the mega-costs.
The crisis is a result of at least eight distinct but related failures:
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