The Ongoing TBTF Argument

Do Regulators Really Have the Power to Let Banks Fail?
American Banker
Fifty-seven percent of respondents said no.

Bipartisan Policy Center Launches Financial Regulatory Reform Initiative
Bipartisan Policy Center
Initiative to develop credible and politically achievable reforms that address consumer and taxpayer protection and promote open and competitive financial markets.

A Simpler Way to End Too Big to Fail
Bloomberg
A fee would be better. Banks would be less likely to overborrow if they knew they would be charged a fee for every dollar of non-deposit liability. Such a levy would also bring money into the federal government at a time of fiscal strain.

Barney Frank Releases Staff Analysis of How the Wall Street Reform Law Addresses "Too Big to Fail"
Committee on Financial Services – Democrats
Claims that taxpayers will bear the cost of an Orderly Liquidation similarly are not based on the statute, which explicitly rules out the possibility that taxpayers ultimately will lose money.24 First, the FDIC and the United States are the first creditors in line for repayment from the proceeds of the sale of the firm’s assets.

Does Dodd-Frank Legislation End Too Big to Fail?
CNBC
On the one hand, Moody’s sees the resolution plan in Dodd-Frank ending too big to fail by forcing creditors at the bank holding companies to take losses. On the other hand, it sees the regulators practically enshrining it in law by offering support to the operating company creditors.

Financial Stability Regulation - speech by Fed Gov. Daniel Tarullo
Federal Reserve
Tthere would be merit in its adopting a simpler policy instrument, rather than relying on indirect, incomplete policy measures such as administrative calculation of potentially complex financial stability footprints. The idea along these lines that seems to have the most promise would limit the non-deposit liabilities of financial firms to a specified percentage of U.S. gross domestic product, as calculated on a lagged, averaged basis. In addition to the virtue of simplicity, this approach has the advantage of tying the limitation on growth of financial firms to the growth of the national economy and its capacity to absorb losses, as well as to the extent of a firm's dependence on funding from sources other than the stable base of deposits.

Dodd Frank Anniversary Poll: Three Out Of Four Voters Favor Strong Oversight Of Wall Street
Lake Research
Financial reforms enacted in response to the financial meltdown remain popular with Americans likely to vote in 2012.

The Dodd-Frank Act and the Persistence of “Too Big To Fail”
The Financial Services Committee
If we judge the Dodd-Frank Act on whether it “ends too big to fail” and whether it “ends bailouts,” we have no choice but to conclude that the Dodd-Frank Act is a failure.

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