This is a broad analysis of why banks failed, or nearly failed, in the G-10 countries during the volatile years since 1980s. It also looks at what governments should do now to solve the ever-growing problem of failures.
Bank failures, near failures, and crises are common throughout the world, and particularly in the major G-10 trading countries, including the United States, Germany, and Japan. But equally common are the bailouts by national governments, when they perceive that bank failure will…
This is a broad analysis of why banks failed, or nearly failed, in the G-10 countries during the volatile years since 1980s. It also looks at what governments should do now to solve the ever-growing problem of failures.
Dealer banks - that is, large banks that deal in securities and derivatives, such as J.P. Morgan and Goldman Sachs - are of a size and complexity that sharply distinguish them from typical commercial banks. When they fail, as we saw in the global financial crisis, they pose sign…