“Too big to fail” firms must be shrunk warns FDIC chair
US Federal Deposit Insurance Corporation chairman Sheila Bair told the Institute of International Finance she wants regulators to shrink "too big to fail" firms, Reuters reports.
Blair, who want to be the US top regulator, said a proposal to create the authority to shut down failing systemically important financial firms may need to be extended to insurers and hedge funds.
"We need to end 'too big to fail' and this needs to be an overarching policy that applies to everyone," Bair said.
Living wills
Financial firms subject to systemic risk shutdown authority should likely also be required to publish "living wills" giving details on how an orderly wind-down would happen. This would be published on their websites so shareholders and customers could see it in advance.
