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In RealTime posts, PIIE senior staff and colleagues discuss the fast-moving economic news, financial developments, and public policy choices confronting the United States and the world.
Global megabanks and their friends are pushing back hard against the idea that additional reforms are needed—beyond what is supposed to be implemented as part of the Dodd-Frank 2010 financial legislation. The latest salvo comes from Goldman Sachs which, in a recent report, Measuring the ‘Too Big to Fail’ Effect on Bond Pricing denied there [...]
The Ukrainian banking system has gone through persistent convulsions in the last seven years. A wave of West European purchases of Ukrainian banks just before the crisis of 2008–09 has been largely reversed. Instead, Russian and Ukrainian state banks have expanded, as have banks owned by people close to President Viktor Yanukovych. In 2006–08, Ukrainian [...]
The next euro country in possible need of an international stabilization program is not Italy but Slovenia. It is suffering from a moderate banking crisis. Newly appointed center-left Prime Minister Alena Bratusek argues that an international assistance program might not be necessary. She might be right, but only if the Slovenian government acts hard and [...]
My RealTime posting on March 25 about the potential precedent set by the Cyprus bailout deal provoked much commentary focusing on the impact in the euro banking system. Let me elaborate. The precedent of imposing losses on uninsured depositors in Laiki Bank and the Bank of Cyprus was a sound one, but that does not [...]
In a recent interview with PBS’s Frontline, Lanny Breuer—head of the criminal division at the Department of Justice—appeared to admit that some financial institutions were too big to prosecute. In the “too big to fail is too big to jail” controversy that ensued, lobbyists and other supporters of big Wall Street firms tried all kinds [...]
On February 14, European Commissioner Michel Barnier and Federal Reserve Governor Daniel Tarullo both indicated their agreement to quickly give the Basel III accord binding force over, respectively, European and American banks. This is welcome. But even more important than the speed of adoption is that implementation should stay true to what the accord stipulates. [...]
The political agreement reached early on December 13 by Europe’s finance ministers makes it highly likely that legislation establishing a Single Supervisory Mechanism (SSM) with the European Central Bank (ECB) at its center will be enacted in March 2013. This is a big European success, high up on what was the range of possible outcomes. [...]
Note: This essay was also posted on Mr. Johnson’s blog Baseline Scenario. Two diametrically opposed views of Wall Street and the dangers posed by global megabanks came more clearly into focus last week. On the one hand, William B. Harrison, Jr.—former chairman of JP Morgan Chase—argued in the New York Times that today’s massive banks [...]
I have recently returned from a trip to Greece and offer these reflections based on many conversations with policymakers and other experts. Basic Overview. After the second elections in June, New Democracy formed a coalition with the Socialist party PASOK and Democratic Left under Prime Minister Antonis Samaras. The government’s first task is to implement [...]
As indicated by Spanish and Italian secondary market 10-year bond yields of 6 to 7 percent, the euro area remains a work in progress. Italy, on the other hand, seems capable of issuing new bonds, at least to domestic buyers, at slightly lower rates, despite its recent Moody’s downgrade. Because the European Central Bank (ECB) [...]