Monday, January 4, 2010

Simon Johnson: Six Banks in the U.S. Think (In their own minds) That They Are TBTF

This morning at the American Economic Association meeting in Atlanta, Simon Johnson participated in a panel discussion, “Global Financial Crises: Past, Present, and Future,” with Allen Sinai (the organizer), Mike Intriligator, and Joe Stiglitz.

Among the points Johnson made:

1.The most serious problem we face is that 6 banks in the U.S. are now undeniably (in their own minds) Too Big To Fail.

2.What is going on is not standard regulatory capture, but the U.S. is now an advanced Oligopoly.

3. Banks have put money into buying intellectual influence.

4. There has been "false" financial innovation.

5. Europe is less captured by finance (Except Britain and Switzerland) .

The slide presentation that went along with Johnson's remarks is here. It is fascinating in its observations and a must read. I don't agree with everything Johnson says, most specifically that deregulation can be blamed, in part, for the economic crisis. I also have a problem with the lack of Johnson identifying the role of the business cycle in the current crisis. That said, there is much insight and much to ponder in these slides.

As for the six banks Johnson has in mind that think they are TBTF, my guess is:

Goldman Sachs

Morgan Stanley


Bank America

Wells Fargo


1 comment:

  1. Too Big to Fail is Too Big to Exist

    Petition to Treasury Secretary Timothy Geithner

    Passage of The Too Big to Fail, Too Big to Exist Act is essential for a strong American economy and a secure future.