14 September 2018

The Telegraph: Banks still 'too big to fail' ten years on from the crisis, says OECD chief

Discussing the lessons learned from the crash ten years on, OECD chief Angel Gurria said that while the finance sector understands "what is at stake a lot better than before" and there's been various improvements, the lesson about size hasn't really sunk in.

"Have we learned from the question of size? Not really, in fact the 'too big to fail' syndrome appears to still be there," he said. "The banks are becoming very large; there's mergers, absorption of other smaller banks."

'Too big to fail' became the catchphrase of the crisis after some banks were deemed too large and important to be allowed to go under, forcing governments to bail them out. Banks have since been forced to build up their capital buffers.

"One feels more comfortable with the financial system [now]," added Mr Gurria. "You really feel today the problem is in the political sphere rather than the macro or policy sphere."

His comments came days after former British prime minister Gordon Brown said: "There has not been a strong enough message sent out that government won’t rescue institutions that haven’t put their houses in order." 

Xavier Rolet, the former head of the London Stock Exchange and an ex-Lehman Brothers' executive, also discussed his experiences of the crisis.

Mr Rolet said: "If you look at the bigger picture, major crises have always come from the same source - our inability to measure, monitor, control, manage leverage i.e debt in the banking industry."

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