The FSB (Financial Stability Board) of the G-20 has created a list of 24 banks and 6 insurance companies that pose significant risk to world financial systems and require special oversight. The list has not been officially released, but 30 names have been mentioned at ft.com and a list has been published by the editor at Wall Street Pit.
- Bank of America Merrill Lynch (BAC)
- Citigroup (C)
- Goldman Sachs (GS)
- JPMorgan Chase (JPM)
- Morgan Stanley (MS)
- Royal Bank of Canada (RY)
- BBVA (BFR)
- Santander (STD)
- Banca Intesa (BIPOF.PK)
- UniCredit (Private)
- Deutsche Bank (DB)
- ING Group (ING)
One of the oversight requests asks for these firms to construct "living wills," break-up plans in case of financial distress. This proposal is meeting with objection from the more complex firms, according to Patrick Jenkins and Paul J Davies in the ft.com article (here). These firms argue that break-up plans are impossible to draft without knowledge of the source of a future crisis.
This is a travesty. These arguments are being presented by people for one of two reasons:
1. These firms don't know what they are doing; or
2. The statements of protest are simply lies.
It is possible that both reasons are correct. If it is impossible to draft meaningful recovery and resolution plans, then the companies are simply casinos waiting for cards to be dealt and should be removed from the financial world. If these companies are dealt aces, they need no plan. If they are dealt deuces, there is no meaningful plan to proceed. Any business which can not define its course of action until the next card is dealt has no operating plan and should be removed from the financial system.