Customer Quote by James Rickards
““The solutions to this systemic risk overhang are surprisingly straightforward. The immediate tasks would be to break up large banks and ban most derivatives. Large banks are not necessary to global finance. When large financing is required, a lead bank can organize a syndicate, as was routinely done in the past for massive infrastructure projects such as the Alaska pipeline, the original fleets of supertankers, and the first Boeing 747s. The benefit of breaking up banks would not be that bank failures would be eliminated, but that bank failure would no longer be a threat. The costs of failure would become containable and would not be permitted to metastasize so as to threaten the system. The case for banning most derivatives is even more straightforward. Derivatives serve practically no purpose except to enrich bankers through opaque pricing and to deceive investors through off-the-balance-sheet accounting.””
About This Quote
Source Speech: Financial Stability Forum, 2015
Breaking up big banks and banning derivatives reduces systemic risk and contains failures.
In simple terms: Large banks and derivatives cause financial danger.
Key Takeaway
Limit size, ban risky tools.
Themes
finance
regulation
systemic risk
risk management
Mood
analytical
critical
Type
policy
economic
When to use this quote
- Bank reform
- derivative bans
- infrastructure financing
- economic policy
Key Concepts
Moral hazard
financial engineering
Questions to Reflect On
- How can policymakers overcome industry lobbying?
- What alternatives replace derivatives?
A Different Perspective
Implementation faces political resistance and market pushback.
![“This ... he largest financial bailout in history ... was not just a bailout of SVB [Silicon Valley Bank]. It was a bailout of over fifty thousand SVB depositors with over $170 billion in deposits. It was a bailout of SVB's customers, it's employees, their suppliers, and the entire high-tech…” quote by James Rickards](https://sms4smile.com/quotes/img-quotes/385/james-rickards-25234_around-the-world_this-he-largest-financial-bailout-in-his_360776.jpg)
