If the Lehman Brothers failure proved anything, it was that large, complex bank failures are messy; they destroy value and can destabilize financial markets.
April 4, 2014
April 3, 2014
Why Bail‑in?
Walter Bagehot is always good for an epigraph. And this epigraph is a good one: going well beyond traders.
The Failure Resolution of Lehman Brothers
The bankruptcy of Lehman Brothers and its 209 registered subsidiaries was one of the largest and most complex in history, with more than $1 trillion of creditor claims in the United States alone, four bodies of applicable U.S. laws, and insolvency proceedings that involved over eighty international legal jurisdictions.
April 2, 2014
Resolution of Failed Banks
During the recent crisis, some of the largest and most prominent financial institutions failed or nearly failed, requiring extraordinary intervention from regulators, such as extended access to lender-of-last-resort facilities, debt and deposit guarantees, and injection of capital to mitigate systemic risk.
April 1, 2014
Mixing and Matching Collateral in Dealer Banks
The failure or near-collapse of some of the largest dealer banks on Wall Street in 2008 highlighted the profound complexity of the industry.
March 31, 2014
Measuring Global Bank Complexity
Paraphrasing a famous Supreme Court opinion: “I know bank complexity when I see it.”
Posted at 7:00 am in Banks, Euro Area, Financial Markets, International Economics, Regulation | Permalink
March 28, 2014
Evolution in Bank Complexity
In yesterday’s post, our colleagues discussed the historic changes in financial sector size.
March 27, 2014
The Growth of Murky Finance
Building upon previous posts in this series that discussed individual banks, we examine the historical growth of the entire financial sector, relative to the rest of the economy.
Posted at 7:00 am in Economic History, Financial Institutions, Financial Markets, Regulation | Permalink | Comments (3)
March 26, 2014
Do “Too‑Big‑to‑Fail” Banks Take On More Risk?
In the previous post, João Santos showed that the largest banks benefit from a bigger discount in the bond market relative to the largest nonbank financial and nonfinancial issuers.
Evidence from the Bond Market on Banks’ “Too‑Big‑to‑Fail” Subsidy
Yesterday’s post presented evidence on a possible upside of very large banks, namely, lower costs.
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