Now we see a continuation of the idea that self-regulation will make the banks safer and less prone to crises. Therefore, banks have been tasked with creating their own "living wills" which are supposed to prevent any future financial crisis (brought to us in the past by fraud committed by these very same banks).
In our present regulatory climate, what bank can be depended upon to create its own living will, or to plan its own shutdown through "orderly bankruptcy" when banks all hold the implicit belief that the Federal Reserve will bail them out in order to prevent the collapse of the global financial system? This threat has already been made and gave us TARP.
We have heard this argument before. Don't tell us another fantasy story because we know that self-regulation does not work.
Dodd-Frank Implementation Defended by U.S. Regulators
By Cheyenne Hopkins - Blooomberg
U.S. regulators will tell lawmakers they are making significant progress to prevent a repeat of the 2008 credit crisis, pushing back against complaints of slow progress and efforts to undo parts of the Dodd-Frank Act.
Officials from agencies including the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. will appear before the Senate Banking Committee today at a hearing on implementation of the 2010 regulatory overhaul. Their prepared remarks highlight completed work and rules nearing completion while warning against attempts to roll back key provisions.
. . . .
The living wills are meant to be self-written plans for financial firms to shut themselves down through an orderly bankruptcy if faced with failure. Last year, 11 of the largest banks were required to file plans, including JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Goldman Sachs Group Inc. Those banks face a second filing deadline July 1.
Read the whole article here