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Banks no longer ‘too big to fail’ says Bank’s outgoing deputy governor Tucker

by: IFAonline
  • 14/10/2013
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In his final speech as deputy governor of the Bank of England Paul Tucker revealed that the resolution regime, which would allow one of the world's largest banks to collapse without being rescued, is now in place.

‘The necessary technology is clear. The necessary restructuring of firms is clear, and the necessary degrees and forms of cross-border co-operation are clear. It is now a matter of just doing it,’ Tucker (pictured) told the Institute of International Finance in Washington, according to the Daily Mail.

The deputy governor has been working flat out since the collapse of Lehman five years ago to help put in place a so-called ‘resolution’ regime to end the ‘Too Big to Fail’ problem that left Western governments picking up the pieces in the wake of the 2008 financial panic.

‘Nothing is more important to the success of the international reform agenda,’ Tucker insisted.

The Bank of England has agreed with the Americans that it would be willing to ‘step aside’ and allow the City-based subsidiaries of US banks to become part of a resolution run by the US authorities.

London still needs the US to deliver a reciprocal arrangement that would place the Old Lady in charge if one of the significant banks were to collapse.

Under the Tucker ‘resolution’, bank bonds would be converted into shares and the healthy part of a collapsed bank would be rapidly returned to operations.

Tucker – who was thwarted in his ambitions to succeed Mervyn King as governor – steps down from the Bank at the end of this week to take up a new role as a teaching fellow at Harvard University.

 

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