Thursday, November 10, 2011

The List of the World's 29 "Too Big To Fail" Banks, and What It Means

The secret is out - the WSJ has posted the list of the world's 29 "too big to fail" banks (in the opinion of the G-20, at least):

  • Bank of America (US)
  • Bank of New York Mellon (US)
  • Citigroup (US)
  • Goldman Sachs (US)
  • J.P. Morgan (US)
  • Morgan Stanley (US)
  • State Street (US)
  • Wells Fargo (US)
  • BNP Paribas SA (France)
  • Banque Populaire (France)
  • Crédit Agricole SA (France)
  • Société Générale SA (France)
  • Barclays PLC (UK)
  • HSBC Holdings PLC (UK)
  • Lloyds Banking Group PLC (UK)
  • Royal Bank of Scotland PLC (UK)
  • Mitsubishi UFJ FG (Japan)
  • Mizuho FG (Japan)
  • Sumitomo Mitsui FG (Japan)
  • Commerzbank AG (Germany)
  • Deutsche Bank AG (Germany)
  • UBS AG (Switzerland)
  • Credit Suisse AG (Switzerland)
  • Dexia SA (Belgium)
  • Bank of China (China)
  • Unicredit Group SA (Italy)
  • ING Groep NV (Netherlands)
  • Banco Santander SA (Spain)
  • Nordea AB (Sweden)

Interesting list. The question is, what should we do with this new knowledge? Well, that depends greatly upon what you mean by "we":
  • Since these banks are almost definitely going to get bailed out if something goes wrong, you might want to invest in these banks (or, better yet, buy bonds issued by these banks), because it's an almost guaranteed, safe investment.
  • Or, you might want to put your deposits in these banks, since they're not going anywhere.
  • Alternatively, if you don't think that any bank should be "too big to fail," you should be sure to do no business with these banks - don't invest in them; withdraw your money from them; etc.
  • If you're a government, you might decide to break up these banks into smaller banks that are small enough to fail, as this might increase stability and efficiency in the financial markets.
  • Alternatively, if you're a government, you might not want to anger these banks, as they likely control your (and the world's) economy.

So, what would you do with the "too big to fail" banks?

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