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Break up the big banks May 11, 2012

Posted by proeconomia in Main, Monetary policy, News on Greece, On the crisis, Opinion.

Hey, that ain’t me saying this! Its a very serious and documented article from Reuters which you should read carefully. Based on the article’s arguments maybe one would have to rethink the attempts of mergers of Greek banks? I don’t know outright. Here are two excerpts from the article:

“In an essay in the 2012 annual report of the Federal Reserve Bank of Dallas, Harvey Rosenblum, the bank’s head of research, called for the government to break up the country’s largest banks. Rosenblum argued that only smaller banks – not the increased capital requirements, stress tests and other measures in Dodd-Frank – will prevent another crisis. A financial system composed of more banks, numerous enough to ensure competition in funding businesses and households but none of them big enough to put the overall economy in jeopardy, Rosenblum wrote, will give the United States a better chance of navigating through future financial potholes and precipices.” (my emphasis, this is what true competition is all about) and,

“The skepticism from the right and left is legitimate. Our largest banks remain “too big to fail,” continue to defy regulation and have paid too small a price for a financial crisis that decimated the middle class. The U.S.’s big banks should be broken up. Smaller banks will be easier to regulate – and foster more competition.”



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