Increasingly, leading bankers repeat versions of the argument made recently by E. Gerald Corrigan in his Dolan Lecture at Fairfield University. Corrigan, former President of the New York Fed and a senior executive at Goldman Sachs for more than a decade, makes three main points.
- “Large Integrated Financial Groups” – at or around their current size – offer unique functions that cannot otherwise be provided. The economy needs these Groups.
- Breaking up such Groups would be extremely complex and almost certainly very disruptive.
- An “Enhanced Resolution Authority” can mitigate the problems that are likely to occur in the future, when one or more Group fails.
These assertions are all completely wrong. Continue reading