[DEBATE] : Roubini Says Bank Takeovers Deepened Financial Market Crisis
Riaz K Tayob
riaz.tayob at gmail.com
Thu Apr 9 11:55:19 BST 2009
[... or the problem is the solution...]
Roubini Says Bank Takeovers Deepened Financial Market Crisis
By Lynn Thomasson and Thomas R. Keene
April 8 (Bloomberg) -- Bank takeovers worsened the financial crisis by
making firms that were already too big even bigger, said Nouriel
Roubini, the New York University professor who predicted the financial
"The institutions are insolvent," Roubini said in a Bloomberg Radio
interview. "You have to take them over and you have to split them up
into three or four national banks, rather than having a humongous
monster that is too big to fail."
JPMorgan Chase & Co. agreed to buy Bear Stearns Cos. in March 2008, with
help from the Federal Reserve, while Bank of America Corp. purchased
Merrill Lynch & Co. Wells Fargo & Co. took control of Wachovia Corp. and
PNC Financial Services Group Inc. got National City Corp.
Banks around the world have reported $1.29 trillion in credit losses
tied to the housing market collapse since 2007. The deficits, which
spurred the first simultaneous recessions in the U.S., Europe and Japan
since World War II, pushed the American government to pledge $12.8
trillion to stabilize the banking system and revive economic growth.
That figure amounts to $42,105 for every man, woman and child in the
The Standard & Poor's 500 Index, which tumbled 38 percent in 2008, has
rallied 22 percent after sinking to a 12-year low on March 9. Roubini
said in a Bloomberg interview that day that the S&P 500 is likely to
drop to 600 or lower this year as the global recession intensifies.
To contact the reporters on this story: Lynn Thomasson in New York at
lthomasson at bloomberg.net; Thomas R. Keene in New York at
tkeene at bloomberg.net.
Last Updated: April 8, 2009 14:53 EDT
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