• 4 minutes England Running Out of Water?
  • 7 minutes Trump to Make Allies Pay More to Host US Bases
  • 10 minutes U.S. Shale Output may Start Dropping Next Year
  • 14 minutes Washington Eyes Crackdown On OPEC
  • 2 hours One Last Warning For The U.S. Shale Patch
  • 6 hours Russian Effect: U.S. May Soon Pause Preparations For Delivering F-35s To Turkey
  • 2 hours Chile Tests Floating Solar Farm
  • 13 hours China's Expansion: Italy Leads Europe Into China’s Embrace
  • 13 hours Poll: Will Renewables Save the World?
  • 13 hours New Rebate For EVs in Canada
  • 4 hours Trump Tariffs On China Working
  • 16 hours The Political Debacle: Brexit delayed
  • 6 hours Trump sells out his base to please Wallstreet and Oil industry
  • 4 hours Biomass, Ethanol No Longer Green
  • 1 day Oil-sands recovery by solvents has started on a trial basis; first loads now shipped.
  • 7 hours Read: OPEC THREATENED TO KILL US SHALE
  • 11 hours 3 Pipes: EPIC 900K, CACTUS II 670K, GREY OAKS 800K
Oilfield Services Might Not Fully Recover Till 2025

Oilfield Services Might Not Fully Recover Till 2025

The global oilfield service sector’s…

OPEC Sets Oil Market Up For A Bullish Spring

OPEC Sets Oil Market Up For A Bullish Spring

OPEC production cuts continue to…

Why Large Banks Shouldn't be Broken Up

The logic of cutting down huge institutions could mean splitting the largest ones into several pieces. Yet banks do not always come in easily divisible parts. Such a move could amount to eradicating the largest banks rather than splitting them up — and eradication is both politically unlikely and potentially disastrous for the economy. In short, if the resulting parts of a divided bank cannot turn a profit, the split-up may prompt the very bailout it was trying to avoid.

Another fear is that American money market operations would move to larger foreign banks, which would have a newly found competitive advantage. If a financial problem arose, we would either bail out the foreign banks or rely on a foreign central bank to protect our own interests. Neither option seems appealing.

Even if a breakup went well, the incentives for the new, smaller banks would be unhealthy. Those banks could make mistakes or take on bad risks without being punished very much in terms of capitalization or revenue, because of their legally capped size. Even if they made big mistakes, these banks would probably be pushing on the frontier of maximum allowed growth. Eventually, the competitive process would cease to make these banks tougher or smarter or leaner, and we would just be cultivating another kind of banking system where bad or irresponsible decisions don’t lead to financial failure.

For the full article click here.



Join the discussion | Back to homepage

Leave a comment
  • OzHouse Alt News on February 14 2012 said:
    There is only one split that matters - splitting gambling banks from deposit banks. This way when the gambling bank goes bust it will not take down everyone else's money.

    http://ozhouse.org

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News