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Thursday, March 14, 2013

Keating Fires Back at 'Too-Big-to-Fail' Op-Ed

It's disappointing that Dallas Fed President Richard Fisher would call Dodd-Frank's too-big-to-fail solution a failure when regulators haven't even finished implementing it, ABA President and CEO Frank Keating said in a letter to the editor published in this morning's Wall Street Journal.

Keating was responding to a March 11 Journal op-ed piece by Fisher and Dallas Fed EVP Harvey Rosenblum in which they advocated restructuring large banks.

"Before we add another layer of new restrictions and corporate restructurings, it's important to consider what Dodd-Frank actually instructs regulators -- including the Fed -- to do," Keating said.

He listed several changes mandated by the reform law that target too-big-to-fail, including more stringent capital and liquidity rules, annual stress tests, living wills and creation of the Financial Stability Oversight Council.

Keating emphasized that deceptively simple solutions aren't the answer, and artificial government-mandated restructuring never works in a free-market, democratic society.
[W]e have the strongest banking sector in the world with all-size banks connected in ways that are essential to our economy.

Breaking up large institutions would destroy these synergies and drive business to foreign competitors and shadow banks, ending our country's status as a premier financial center. Let's implement the mandates Congress enacted to end too-big-to-fail and enhance our financial system -- not destroy it.

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