The Group of Twenty (G20) has approved
post-crisis bank regulatory standards designed
to end too-big-to-fail. Counsel in the US,
however, are sceptical of ever severing the link between big
banks and government.
The Financial Stability Board (FSB) issued its
final standard for Total Loss Absorbing Capacity (TLAC) earlier
this month, which the G20 approved at its November meeting.
Minimum TLAC requirements will activate in phases. From January
2019, the requirement will be 16% of risk-weighted assets,
rising to 18% in January 2022.
The aim of TLAC, which applies to globally important system
banks (G-SIBs), is ensuring tax payers won’t have
to bail out large banks in future crises, the so-called
too-big-to-fail problem. "But too-big-to-fail is not well
defined," said Oliver Ireland, partner at
Morrison & FoersterAccording to Ireland,
post-crisis bank regulation has reduced, not abolished, the
likelihood of such bail outs. "It will always...