Page 21 - The Banks Article

The legislation sought to reduce the possibility that

institutions could become too big to fail and require the
costly bailouts necessitated during the crisis. Despite

President Trump’s pledge to roll-back the Dodd-Frank Act it

would appear, according to the Boston Consulting Group

(BCG) Report, that regulatory control is here to stay.

However, as Professor Richard Werner points out: “if Lloyds

Bank, with a balance sheet of £2 trillion, wants to grow 10% a
year, it needs to increase lending by up to £200 billion every

year, but it is not going to do it by going down the labour-

intensive route of lending £20,000 to 10 million small firms. By

reducing the average scale of banks, we would be reducing the
minimum scale of deals that the banks are interested in”. (13)

How this impacts upon government policy of stimulating
small business growth is not hard to determine.

However, the BCG said a major challenge awaits in

determining just how those big institutions will be unwound
should they pose systemic risk.

The report noted that banking reforms will continue, despite

the general anti-regulatory climate coming from the new
U.S. presidential administration.

In early September 2017, TSB(UK) boss, Paul Pester
commented:

“The other banks have learned nothing from the financial crisis:
they continue to treat customers with contempt despite having

to be bailed out by taxpayers.” (14)