baji kimran

Big Banks: Still in Charge

1) It is not entirely clear to me that "Too Big to Fail" is the correct term to use for the problem of the "big US banks". I have seen some people describe the problem as Too Interconnected to Fail.

2) One cannot just unilaterally limit the size of US banks. It is interesting that Seeking Alpha has recently published this article:

seekingalpha.com/artic...

(There appears to be some discrepanies with the numbers listed in the article, but none-the-less the article does illustrate that the bigness of banks is not only in the US)

Banking is global. If big banks are a problem, then a global solution is required. All the banks on the list are too big for the individual home countries to "resolve".

3) The impact of the graph in the article rests soley on the assertion that BofA,Citi,Wachovia, should have failed. If the data from that assertion was not included in the graph, the graph, in my opinion, would have prompted a "so-what, is that all", response.

Also one can argue that BofA really was not in that bad of shape if it had not been for the Merril Lynch acquisition, and Wachovia in fact did not fail, it was bought for approx. $6/share, implying that the FDIC would not have had to cough up any money to resolve Wachovia so it should not be considered a "failed" bank.