Banks Love Fed's Too-Big-To-Fail Plan, If They Can Change It
- Wall Street groups want to scrap debt demand Fed sees as key
- Industry needs rule as a defense that firms are now much safer
Here's Why 'Too Big to Fail' Is Still a Problem
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Wall Street lobbyists had to inhale deeply. In one breath they said regulators’ latest plan to prevent big banks from causing another financial crisis was both horribly flawed and a solution that makes breaking up giant lenders unnecessary.
The pivot from criticism to praise shows the financial industry’s tortured relationship with a Federal Reserve proposal that would wipe out shareholders and most bond holders to pay for a bank failure. Known as total loss-absorbing capacity, or TLAC, the rule stipulates additional capital buffers that lenders have to build to be able to endure heavy losses.