May
01

Size Matters

The Brown-Vitter proposal to force banks with assets over $500 billion to hold roughly double the capital of smaller banks, is overly simplistic. Big banks should be forced to hold extra capital to eliminate any “Too Big to Fail” funding advantage. Furthermore, all banks should hold more capital the bigger and more interconnected they are with other banks. After all, a failed huge interconnected bank will take others with it.

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