The problem for regulators
is that so much has been done to overhaul banking and financial regulation
since the collapse of Lehman Brothers that knowing how the system would now
respond in a crisis is impossible.
Two
unconnected statements from authorities in the US and Britain in the past 24
hours should cause concern for those who worry that the global banking system
has become more dangerous in the six years since the crisis, not less.
On
Wednesday, the US Federal Reserve published its annual bank capital plan review
that saw the North American businesses of Citigroup, HSBC, RBS and Santander
all rejected for what it said were “qualitative concerns”.
This
morning, the Bank of England’s Financial
Policy Committee (FPC) released a statement from its latest meeting in which it
warned obtusely that “changes to the structure and functioning of markets as
banks adapted business models to the aftermath of the financial crisis” meant
it had become more difficult to assess the impact of “unexpected developments
from any source”.
What
the Fed and the Bank both appear to be saying is that big banks remain too
complex and that changes made to financial and bank regulation since the crash
in 2008 have resulted in the job of assessing systemic risk becoming much
harder.
Left
unspoken to a large extent in both statements was the spectre of growing financial risks in emerging
markets.
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