The Future of Financial Regulation: Who Should Pay for the Failure of American and European Banks?

Description

A number of changes have been made to the supervision and regulation of banks as a result of the recent financial meltdown. Some are for the better, such as the Basel III rules for increasing the quality and quantity of capital in banks, but legal changes on both sides of the Atlantic now make it much more difficult to resolve failing banks by means of taxpayer funded bail-outs and could hinder bank resolution in future financial crises. In this book, Johan A. Lybeck uses case studies from Europe and the United States to examine and grade a number of bank resolutions in the last financial crisis and establish which were successful, which failed, and why. Using in-depth analysis of recent legislation, he explains how a bank resolution can be successful, and emphasizes the need for taxpayer-funded bail-outs to create a viable banking system that will promote economic and financial stability.

Johan A. Lybeck is CEO of Finanskonsult AB. As an academic, he has been, inter alia, a Chaired Professor of Economics, an Associate Research Professor of Econometrics and an Adjunct Professor of Finance. His banking career includes positions as Senior Vice President of Swedbank (Stockholm) in charge of financial strategy and Chief Economist at Matteus Bank. He is the author of A Global History of the Financial Crash of 2007-2010 (Cambridge, 2011).

'This book offers a deep dive into the issue of how to handle failing banks. The topic is important for understanding recent events in the US, current events in Europe, and much of what we will experience in the future. The author's main contribution is to provide detailed and well-researched case studies of what happened in particular banks - some of which experienced various forms of bailout, while others (or their investors) were subject to various kinds of bail-ins.' Simon Johnson, Ronald A. Kurtz (1954) Professor of Entrepreneurship, MIT Sloan School of Management 'Whatever opinion one holds on the author's view about the relative merits of bailing in or bailing out, this book makes a major contribution through its long chronology of events in the global financial crisis and its extensive set of case studies of the treatment of bank problems in that period. Other books exist which look at single countries, primarily the US, but there is no equivalent which considers the problems in both the US and Europe so thoroughly.' David Mayes, University of Auckland Business School