"My comment on the BBC's Newsnight programme that failures of big banks are very rare and that RBS was an "aberration" caused something of a storm. Some people said that they were "shocked and horrified" that I was "defending TBTF". Others complained about the behaviour of big banks in recent years. But I did not defend TBTF, and I did not defend the behaviour of banks. My comment was simply a statement of fact. Big banks fail very rarely. RBS's failure was the first failure of a big bank in the UK for over 100 years."Read on here.
Wednesday, 6 November 2013
In defence of big banks
Yes, I know.....big banks are bad things. They are widely believed to be systemically dangerous and a serious threat to the economy. "Break them up!" is the cry. But the facts say otherwise. My new post on Pieria gives a bit of a history lesson on financial crises and concludes that the most systemically-dangerous banks are not the most obvious ones.....