The U.S. and Global Banking: Collaboration or Imperialism?
On both sides of the Atlantic, there is agreement on a broad, sweeping power for U.S. banking regulators: the ability to break apart a failing, global bank. Bloomberg today reported that regulators in the U.S. and the U.K. are in agreement on the U.S. government’s authority in such cases to step in, and take control. The Federal Deposit Insurance Corp. (or FDIC) is expected to release a plan, outlining how the liquidation process would work.
Power granting the U.S. this authority is found in the 2010 legislative behemoth, the Dodd-Frank Act. A provision within the act requires banks to have a “Living Will,” a plan in place for how the bank would safely file for bankruptcy. The FDIC and Federal Reserve remain the final arbiters, and if a bank’s plan is not up to snuff, the government entities can require the bank undergo restructuring.
It is all part of the on-going effort to end the “too big to fail” mentality, which has broad agreement across the banking industry as well as government. Speaking to Bloomberg, JPMorgan (NYSE:JPM) CEO Jamie Dimon said that everyone was aware of the need “to eliminate too big to fail.” Also discussing the matter with Bloomberg was Anshu Jain — Co-CEO of Deutsche Bank AG – who stated that to address the situation and ensure people continue to trust the banks, “We need regulators. We need countries to sit down and work out the very complex legal framework.”