Financial groups lobby over ‘too big to fail’

By Shahien Nasiripour

Trade groups representing prominent Wall Street companies have attempted to rebut claims that the largest banks enjoy a taxpayer-provided subsidy because they are considered “too big to fail”. The joint statement by five trade groups, including the Clearing House and Securities Industry and Financial Markets Association, underscores the threat big banks face from Washington, where a growing group of policy makers and lawmakers are considering provisions that would forcibly restructure the largest financial groups. The lobbyists argued that big banks no longer enjoy a large funding advantage relative to their smaller peers after the passage of Dodd-Frank, America’s 2010 law overhauling financial regulation. Karen Shaw Petrou, managing partner at Federal Financial Analytics, a Washington-based financial consultancy, said in a note to clients last week that the sector should plan for potential legislation that could break up big banks, increase capital requirements for the biggest lenders, or impose a fee atop banks’ debt issuances to charge them for the “privilege” of being considered “too big to fail”.