💾 Archived View for gmi.noulin.net › mobileNews › 4431.gmi captured on 2023-12-28 at 19:18:14. Gemini links have been rewritten to link to archived content

View Raw

More Information

⬅️ Previous capture (2023-01-29)

➡️ Next capture (2024-05-10)

-=-=-=-=-=-=-

US and UK agree safer banks plan

2012-12-10 09:34:07

Banking authorities in the UK and US have outlined their plans for limiting the

damage if banks get into trouble.

Under the plans, one national regulator would be responsible for overseeing the

insolvency of a big international bank instead of national bodies dealing with

its subsidiaries in each country.

Shareholders would lose their money and people who had lent the bank money

would end up owning it.

It is hoped it would stop governments having to step in to support banks.

The approach would also allow any remaining sound parts of the business to

continue trading.

But BBC business editor Robert Peston pointed out that there was a danger if

the proposals were successful.

Start Quote

If successful, this should limit the costs to taxpayers and the wider economy

in the next banking crisis

image of Robert Peston Robert Peston Business editor

"If banks are no longer considered too big to fail, the costs for banks of

raising money would rise," he said.

"That means they would feel obliged to charge their customers rather more for

loans and for keeping money safe."

The common approach came from the Bank of England and the Federal Deposit

Insurance Corporation, which is the US institution that would compensate savers

if a bank went under and also tries to limit the effects of bank failures on

the economy.

Another idea is that big banks are forced to have enough funding at the top of

their organisations to absorb losses, instead of spreading it around

complicated organisational structures.

Management would be held responsible for bank collapses and replaced.

The plans would only cover the biggest international banks, referred to as

globally active, systemically important, financial institutions, or GSIFI.