Worst possible outcome: Too-Big-to-Fail Definition May Expand to National Lenders, Shadow Banking

[stockholmer]

http://www.bloomberg.com/news/2012-01-11/too-big-to-fail-bank-definition-may-be-expanded-by-regulators.html

Global regulators may expand the definition of a too-big-to-fail financial firm, signing up domestic lenders, clearing houses and insurers to capital rules designed for the world’s biggest banks.

The “framework should be in place for domestically systemically important banks by the end of the year,” Mark Carney, chairman of the Financial Stability Board, said yesterday after a meeting of the group in Basel, Switzerland.

Deutsche Bank AG (DBK), BNP Paribas SA (BNP) and Goldman Sachs Group Inc. (GS) were among 29 banks subject to the so-called capital surcharge on globally systemic financial institutions drawn up by the FSB in November. Banks will have to boost reserves by 1 to 2.5 percentage points above minimum levels agreed on by international regulators.

“The world contains a whole slew of institutions like that which are not systemic on a global level but are on a national level,” Simon Gleeson, regulatory lawyer at Clifford Chance LLP, said in a telephone interview. “The institution most interesting in this regard is Erste Bank,” he said. “The more you look at it the more you think it’s systemically important to Hungary.”


SNIP

[Mojorabbit]

1. Oh Hell No! nt