Too Big to Fail Rules Hurting Too Small to Compete Banks – Bloomberg 02-27-13

Salient to Investors:

Zhu Min at the IMF said the financial market structure did not change very much and we are not safer.

Sanford Weill, John Reed, David Komansky and Philip Purcell have said that financial conglomerates could be more valuable and safer if split apart.

Amar Bhide at Tufts University says no one can tell what JPMorgan’s investment office is doing until after it’s blown up, not even Jamie Dimon – we need serious restructuring of banks.

Sheila Bair at the Systemic Risk Council said the rules to ensure banks comply are complicated, shot through with exceptions and won’t change behavior significantly – change will incremental, not bold or profound.

Richard Spillenkothen sees permanently reduced returns on equity and less risk taking, but the degree depends on how vigorously the new rules are applied worldwide.

Toos Daruvala at McKinsey says ROE will drop to 11 percent or 12 percent for US banks, in line with the average of the past 50 years, as more and more embrace the universal-lite model.

Joshua Siegel at StoneCastle Partners says small banks will merge because their management teams are aging and new regulations are too costly to bear – massive consolidation, 2,000 to 4,000 banks in the US.

Read the full article at http://www.bloomberg.com/news/2013-02-28/too-big-to-fail-rules-hurting-too-small-to-compete-banks.html

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