Bank Regulation and LIBOR

Too big to fail should not mean restricted liquidity.

Hopefully they don’t use the liability side of banking for market discipline.

But as they don’t even know what a bank is and are in this way over their heads they might!

>   (email exchange)
>   On Tue, Apr 27, 2010 at 8:09 AM, Jason wrote:
>   Possibly if the legislation succeeds in removing risk for those determining the setting…
>   But one of the primary goals is to remove the lending subsidy provided by the TBTF
>   moniker
>   If they firmly establish banks as no longer too big to fail, their short term credit ratings
>   could fall as far as tier 2 in some cases.
>   Thus the average LIBOR setting may move higher just as their CP rates move higher.
>   Also if they lose their ability to lend at lowest rates some of their businesses fall into
>   jeopardy (bank letters of credit, liquidity facilities for VRDNs etc)

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