November 07, 2012
The 28 G-SIFIs, As Selected By The Financial Stability Board
Posted by David Zaring

Last week, the Financial Stability Board, a network of the G20's finance regulators, announced the 28 banks too big to fail, and the capital surcharges that the banks would have to add, given their bigness.  It's the list you don't want to be on, and eight American banks are on it, including Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street and Wells Fargo.  Of these, Citi and JPMorganChase have to add the most capital, which might explain Jamie Dimon's hatred of international bank regulation. These banks have to hold more capital than ordinary banks - which, of course, might in theory be worth it to them, given the corresponding creditworthiness that comes from having an implicit government guarantee.  But so much better, no, to have the guarantee and the same capital requirements as the credit union down the street, right?

Anyway, it shows how international supervision is continuing to evolve.  It used to be that the networks came up with the rules, and left implementation to their members.  Now one such network is making an individualized determination about a. how risky a bank is, and b. what actions it must take to mitigate its riskiness.  Lawyers have a term for that sort of determination: it is called an "adjudication."  Here is the text of the FSB's adjudication.  Here's more from Reuters, and, from Bloomberg, a bit on how Deutsche Bank is going to meet its newly heightened obligations.  And here's Andrew Haldane on the interest from regulators in shrinking banks via capital charges.  The list is below.


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Administrative Law, Finance, Financial Crisis, Financial Institutions | Bookmark

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