The too-big-to-fail problem for banks is greater today than it was in 2008. Since then, the largest U.S. banks have become much larger. On March 31, 2012, the debt of JPMorgan Chase was valued at $2.13 trillion and that of Bank of America Corp. at $1.95 trillion, more than three times the debt of Lehman Brothers Holdings Inc. The debt of the five largest U.S. banks totals about $8 trillion. These figures would be even larger under European accounting rules.
By Anat Admati & Martin Hellwig
Read more at Emperors of Banking Have No Clothes – Bloomberg.
So how are away from our next crises?
In hours or days? 🙂
I can see nothing too alarming in the medium-term, although there are serious structural issues that have to be addressed in the long-term: TBTF, increased bank capital and macro-prudential measures to restrict future bubbles, contingent public liabilities (e.g. Medicare, Medicaid) and unsustainable government welfare models under threat from aging populations, and the failure of democratically-elected government to address many of these issues — preferring to kick the can down the road rather than to make unpopular decisions that are in the nation’s long-term interest.