Seib & Wessel: Tackling ‘Too Big to Fail’ Banks

7/12/2013 11:15AM     

WSJ’s Deborah Solomon explains how U.S. regulators are trying to lick the “too big to fail” problem by making it more costly for banks to stay big -- as Republicans and Democrats in Congress eye even more steps.



the ... easy to clean up two percent ... to three can announce another bank crisis may actually made some steps this week to do that by saying to thank you have to be more conservative ... and gets smaller ... I pray the same kind of what Apple yes so again if Dodd Frank's are set up the architecture for how ... government can take down a failing institution ... they left the law to the D tells of me Aaron and over the last couple of years we've seen ... growing concern that big banks are still to make the rest the financial system ... that if you pack JPMorgan get into trouble ... he would have cost the taxpayer rescues now at the train to do is ... force banks to shrink voluntarily they don't wanna go ... as far as some in Congress have suggested a need to come at him at the Federal ... Reserve officials have suggested ... to go as far as breaking up the banks but they wanna make it hard to keep it so this ... this week we saw then increasing to make all the leverage ratio which basically means that banks hold ... dear reservoirs of financing in case they get into trouble so how the problem ... you don't have a government ... rescue because you've got enough capital there to weather whatever the storm comes there was a wise and force them to shrink though ... it's it's a calculation for some banks mean there is ... a basically the saying if you want to be getting not have enough capital to hold to hold it ... and so it may spur never sanction and you can decide whether it's worth it to you to be as big as you are now ... on its steel didn't have to do things potentially might cut back on dividends ... um you know the cutback in defense of that you have and so it can make it more onerous be taken some banks for some banks that actually options not know where to its attacks and being very day ... so if your baby because it's really good to make a lot of money being bigger willing to pay the tax ... but if your baby ... only because you're too big to fail and people into my because of fear that the model ... will bail you out ... of the tax may not be ... the worst day in the sky the calculation stressed ... that this is that the bank's Avici don't like that's right um I mean everyone ... loses a partisan issue I mean the district is one of those words hard to know where the partisan lines are almost every issue and washed and now ... it is partisan and and the sinister as result ... is a must read this one really uses whining isn't the case we see limited partner Bob Corker creating a a both want the banks to get smaller their divisions about how to do that someone beyond what a much more prescriptive approach but you've got the brown their bill where they're basically an agreement to that the banks didn't hold much higher levels of capital ... on that said I don't think that your business effective legislation move unless there is another big financial crisis or another big for the one ... hand it does have a couple ... left the pot goes in on the right to suspicious of big that it was a long tradition of that in US politics ... and in this case you seen that play again and think the surprise to many of the critics is that ... the Fed and the other bank rate is actually did this isn't it pretty much given up hope right I mean this this this and insist on a sea change in a band a London Whale and maintain all this political pressure yet ... was my new no question banned from Frankie is too big to fail over what are you doing to make sure it's him over ... there seems to have been in the last few months kind of the realization that you know ... we need to do more so what they did this week which is one step there's a lot of other things that they haven't Pipeline Wharf teens on to bigger and bigger capital cushions of the things that that man and given the country's banks and might even say they know is this that that that that kind of this posting is like a franchise fee if you wanna b day he got up at ... a news interesting of the financial crisis began one five six years ago were still trying to figure out ... how to prevent the next one we're not really there yet right I mean that's when the things that I think is getting a lot people posits that ... we see something like the London whale you realize that there is still vulnerability in the financial system and how do we get to a point where even if ... there will likely be another financial crisis to how we get to the point we don't need ... a government bailout as much as people say there won't be one ... there would be if the banks like Citigroup for picnics where he got into trouble