Tag: NYT room for debate

Should Megabanks Be Broken Apart? (NYT Room For Debate)

By Simon Johnson.  This material was prepared as part of the New York Times’ Room for Debate on “Should Mega-Banks Be Broken Apart“?  I strongly recommend the post by Anat Admati.

Writing in the Washington Post, in November 2009, Jamie Dimon, chief executive of JP Morgan Chase, argued:

“Creating the structures to allow for the orderly failure of a large financial institution starts with giving regulators the authority to facilitate failures when they occur. Under such a system, a failed bank’s shareholders should lose their value; unsecured creditors should be at risk and, if necessary, wiped out. A regulator should be able to terminate management and boards and liquidate assets. Those who benefited from mismanaging risks or taking on inappropriate risk should feel the pain.”

But the Dodd-Frank financial reform legislation does not create a “resolution mechanism” that can deal with cross-border megabanks; this point is admitted by all involved. And there is nothing in the G20 process or underway with any other international forum that would make a difference in this regard. Continue reading “Should Megabanks Be Broken Apart? (NYT Room For Debate)”