Fifteen years after the devastation caused by the collapse of the US bank Lehman Brothers, the global economy is still reeling from the vicissitudes of the financial world. Some of the firms that resisted have become gigantic megabanks that are difficult to control and too expensive to repair if they fail. Bank failures in the United States and Switzerland last spring highlighted the lack of accepted reforms, and public bailouts are once again the real underpinnings of the system. Various studies warn of the fragility of the system.
Financial monitoring, a non-governmental organization specializing in financial regulation, in this year’s banking debacle, “the third line of defense took first place. The injection of public money, either through the central bank or by intervening in the public budget, is the last of the three lines of defense designed to contain banking crises. The first two (prudential regulatory and resolution frameworks) implemented to protect society from banking crises have failed. In 2023, the third line of defense again effectively became the first.
System Analysis, No More Crisis: The Unfulfilled Promises of Reform, recalls the true cost of the financial crisis of 2008. The financial sector demanded two billion euros in state aid, that is 3,800 euros for every EU citizen, and the public debt increased by more than 20 in three years (2007-2010). Points of GDP: 57% to 79%. In Spain, the jump was more abrupt, going from 36% to 60% over the same period. This will increase to 120% by 2020, from the current 113%.
Financial monitoring warns of pressures lobby To destroy hard-won defenses after the crisis. “Recommends eliminating the 8% rule, which would allow investors in a failed bank to access taxpayer money before shareholders lose their stakes,” he said, referring to the legislative proposal. Under current regulations, shareholders and creditors must first accept losses of up to 8% of liabilities before using public funds.
At the same time, a recent IMF document, Good supervision: Lessons from the field, pointing out deficiencies in supervision. In his conclusions, he points out that “other responsible authorities pay attention to supervisors’ resources, independence, and legal powers.” He admits that oversight “must be carefully designed and thoroughly implemented” and is “rarely if ever adequate.” “Remember the dozen US senators who wrote to the Federal Reserve Board: ‘SVB’s reckless and excessive risk-taking should serve as a stark reminder that banks cannot afford to police themselves.'”
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