Monday, March 29, 2010

There´s a too big confusion about the “too big to fail” banks.

The losses that generated the current crisis were NOT caused because some banks were too big to fail.

It is the way many of those losses are now being distributed between the investors, the banks and the supposed taxpayers that is being affected by the too big to fail.

Absolutely, banks should be cut down to size, as I have been arguing before Simon Johnson and others could walk (well almost).

If we get rid of the “too big to fail” banks but keep using credit rating agencies to allow for absurd low and discriminatory bank capital requirements we will have done nothing to correct what brought us this mess of absurdly stupid financial losses.