Big Banks

     By Isaac Cohen*

A prominent member of the Federal Reserve has again declared that it is time to end the problem posed by the existence of large financial institutions. Defined as those whose difficulties may endanger financial stability, they are better as known as “too big to fail.”

The difference this time is that the proposal came from the newly appointed President Neil Kashkari of the Federal Reserve Bank of Minneapolis, who has both private and public experience in dealing with these giants. President Kashkari was the senior Treasury Department official, appointed by then Secretary Hank Paulson, to manage the first financial package approved, by the US Congress, to rescue the big banks at the start of the Great Recession. Previously, he worked at Goldman Sachs, when Hank Paulson was head of the then investment bank.

According to President Kashkari, the financial reform approved as a consequence of the Great Recession, known as the Dodd Frank Act, provides a set of tools to make banks safer and to deal with individual bank failures. However, nobody knows if these tools will be useful to deal with a systemic threat to financial stability.

These financial institutions have grown bigger since the Great Recession. For instance, in 2006, assets of the four biggest banks—J.P. Morgan, Bank of America, Wells Fargo and Citigroup—amounted to $5.1 trillion, or 44 percent of total bank assets. In 2015, assets of the same four institutions increased to $8 trillion, equivalent to 51 percent of total bank assets.

*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.

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About Ramón Jiménez

Ramón Jiménez, actual Managing Editor de MetroLatinoUSA. Periodista que cubre eventos de las comunidades latinas en Washington D.C., Maryland y Virginia. Graduado de la Escuela de Periodismo de la Universidad del Distrito de Columbia. Galardonado en numerosas ocasiones por parte de la Asociación Nacional de Publicaciones Hispanas (NAHP) y otras organizaciones comunitarias y deportivas de la región metropolitana de esta capital. También premiado en dos ocasiones como Mejor Periodista del Año por la cobertura de la comunidad salvadoreña; premios otorgados por la Oficina de Asuntos Latinos del Alcalde de Washington (OLA) y otras organizaciones. Ha sido miembro del jurado calificador en diferentes concursos literarios, de belleza y talento en la región metropolitana. Ha visitado zonas de desastre en Nicaragua, Honduras y El Salvador e invitado a esos países por organizaciones que asisten a personas de escasos recursos económicos. Antes trabajó en otros medios de prensa de Virginia y Washington, D.C., incluyendo reportajes para una agencia noticiosa mundial.

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