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Banks Think “Living Will” Sounds So Negative, Would Prefer “Immaculate Victory Plan”

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Sure it might make sense to have a rule, set to be finalized this week, requiring banks to have resolution plans for quick liquidation in the event of a liquidity crisis. But why does it have to be all about failure?

Banking executives and consultants working for large banks say the rule should include room for what a financial institution would do to nurse itself back to health and avoid having to be liquidated. …

"What we would like to say and what we are trying to encourage in the rule is: Don't have a rule that is biased toward failure, have a rule that presumes recovery," said Wayne Abernathy, a top executive at the American Bankers Association.

That idea is being met skeptically by regulators, at least as a component of the living will rule.

U.S. banks look for kinder, gentler death plans (Reuters)


Banks Were Asked If They Would Prefer To Make More Money Or Less Money, Chose More Money

One kind of obvious thing about financial markets is that you can't just call everyone into a room and tell them, "look, guys, just be honest about the price that you would pay / receive for Thing X." This is because financial industry traders are degenerate lying scumbags. No, wait, that's not right. This is because if everyone just told each other their reserve prices then it would be really hard for them to make any money trading and so we, like, wouldn't have a financial system. So you have things like anonymous execution on stock exchanges and dark pools and, um, lying scumbag traders. And that allows you to have profitable trading. Of course you have to put some limits on the lying scumbaggery: you can't tell people you're investing their money while really blowing it on hookers, and I guess now you can't sell someone synthetic CDOs without telling them who was on the other side. But a little fudging around the edges about the price you're willing to pay or receive - or the price you could pay or receive elsewhere - is kind of at the heart of what trading is. So in a sense the amazing thing about the Libor scandal is that people are amazed by it. A quick recap:

Wait, is this not how bills become law? By White House [Public domain], via Wikimedia Commons

Where Is Jeb Hensarling’s Rose Garden Victory Party?

Don't all right-wing dreams destined to die in the Senate get one?