IMF Delivers Unusually Blunt Message Ahead of Big Bank Living Will DeadlineMark Melin
As several of the largest banks are required to submit for approval a living will to regulators by July 1, Karen Shaw Petrou, noted regulatory analyst at Federal Financial Analytics, thinks “several will flunk.”
Failing grade for living will: no clue about how to handle non bank operations
“No one has a clue about how to handle a big bank’s non-banking operations, of which most have many. Even worse, if a systemic crisis this time comes from a non-bank – all too real a prospect given bondmarket jitters – a systemic crisis wholly imagined by any of the resolution standards would erupt,” she wrote in a June 5 memo reviewed by ValueWalk.
As unregulated derivatives that underlie the financial system reach risk levels never before seen – now even a fraction of the interconnected and nontransparent contracts are exercised it could swamp the U.S. FDIC insurance and trigger a banking crisis of historic proportion – Petrou along with the International Monetary Fund are using rather blunt language to point out this issue must be addressed.
This content is exclusively for paying members. Sign up here
If you are subscribed and having an account error please clear cache and cookies if that does not work email email@example.com or click chat