This story appeared in Bank Digest.
"It's time we changed the rules of the game,” stated FDIC Chairman Sheila Bair in comments on strengthening the banking system before the Institute of International Bankers Conference in New York, N.Y., on Nov. 10, 2009. According to Bair, “It's time we closed the book on the doctrine of too big to fail. Only by instituting a credible resolution process and removing the existing incentives for size and complexity can we limit systemic risk, and the long-term competitive advantages and public subsidy it confers on the largest institutions.”
At the same conference, Federal Reserve Board Governor Daniel K Tarullo stated, “Resolution mechanisms must be understood not as silver bullets, but as critical pieces of a broader agenda directed at the too-big-to-fail problem.” According to Tarullo, “In light of what has happened over the past 18 months, it is imperative that governments convince markets that they can and will put large financial firms into a resolution process rather than bail out its creditors and shareholders...Measures such as strengthening capital standards and bringing all systemically important firms within the perimeter of regulation are other essential elements of that agenda.”