“Since he left government to enter politics, it seems Mr. Kashkari hasn’t kept up to date with the many ways in which US-based global financial companies have become simpler, stronger, and more streamlined to serve their customers and clients and drive the real economy. Since none of those financial institutions are within the jurisdiction of the Minneapolis Federal Reserve Bank, it isn't clear why this is his area of interest now, but hopefully some of the progress that has been made will be discussed today in Minneapolis.”
Financial regulation is designed to protect taxpayers and the broader economy. Recent reports, data, and market moves have shown that America's largest banks – which serve customers of all sizes, including America’s largest companies – become smaller and simpler. Capital has doubled and liquidity has tripled among the largest firms. Furthermore, among all banks, new capital surcharges and long-term debt requirements are forcing leaders to reconsider scope and scale.
This week, the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness released a new report, International Financial Markets: A Diverse System is the Key to Commerce, which presents a number of thoughtful and fact-based observations about the role of the financial sector and capital markets in the global economy. Authored by Dr. Anjan Thakor, John E. Simon professor of finance and PhD program director at the Washington University in St. Louis Olin School of Business, the report offers an overview of how a diverse global financial system works to spur economic growth and job creation by providing the necessary products and services businesses and individuals need to succeed.
The findings of last week's government report on big bank subsidies were misconstrued in a recent column by Camden Fine ("A Subsidy of Any Size Is Still Too Big," Aug. 1, 2014). Mr. Fine argues that the study by the Government Accountability Office "reiterates the importance of ending the too-big-to-fail epidemic." In fact, the GAO report offers proof that meaningful progress has been made since the financial crisis.
There has been much debate about the size of large financial institutions and subsequent claims by critics that U.S. banks are unnecessarily large, growing disproportionately, and should be forced to shrink. Today, SNL Financial released an analysis showing that the largest U.S. banks are not so large compared to their international peers. The analysis found that there is currently only one U.S. bank in the top 10 globally, and only three in the top 20. The top 4 spots being held by Chinese banks. Through their size, global reach, and diverse product and services lines, large U.S. financial institutions are critical to serving the financial needs of large U.S.-based corporations that employ millions of American, and to which millions of other small businesses across America sell products and services.
Commentary by Forum President and CEO Rob Nichols: The facts make clear that, in the U.S., the era of "too big to fail" is fading into the rearview mirror. For the U.S. economy to work its best, we need a vibrant and diverse banking sector that includes large global banks, regional banks and community banks. Banks today are safer, sounder, more secure, transparent, accountable and performing their critical roles in the global economy. Rather than picking winners and losers, we need to support a system that works for everyone.
With many studies examining bank funding cost differentials, it is important to have a solid framework for evaluating these studies. Below outlines the University of Chicago's Randy Kroszner's views on the best methodologies, datasets, and direction for future research. What Is The Main Research Challenge Kroszner Finds That Across All Industries, Large Firms Have A [...]
When deliberating over new regulations on large financial institutions, it is important to balance the benefits of regulation against the costs. Large banks provide valuable services to multinational companies that enable them to grow into markets, create jobs, and innovate. To demonstrate this value, the Business Roundtable surveyed their nonbank members and found that virtually all members rely on large banks for a wide-variety of financial services and products.
In her Sept. 18 op-ed “Scaling back ‘too big’ ” Senator Elizabeth Warren is right that enormous progress has been made since 2008 in improving the safety and stability of the financial system. Regulators have new tools to address a future crisis, bank capital has doubled, leverage has decreased, compensation practices have been aligned with long-term performance, and [...]
By Rob Nichols, President and CEO, Financial Services Forum Featured in Politico The U.S. economy is the largest and most diverse economy on Earth, made up of businesses of all types, shapes and sizes. To support the financial needs of large multinational corporations as well as small businesses and family farms, the United States needs financial [...]