Too Big To Fail Will Eventually Fall Apart: Study
We may yet see the end of Too Big To Fail.
That's the message of a research note on Monday by Frederick Cannon and other bank-stock analysts at the firm Keefe, Bruyette & Woods, after studying historical patterns of regulation and de-regulation.
"We believe that the historical analysis suggests that investors should be prepared for the possible eventual break-up of the largest financials," the analysts write, "including" Bank of America, Citigroup and JPMorgan Chase.
The note hits just as Dallas Fed President Richard Fisher is getting headlines for his calls to break up the biggest banks. These calls don't appear to be getting any traction with lawmakers just yet, but they do resonate with a public angry about how these banks blew up the economy only to be encouraged to get even bigger and riskier in the aftermath.
In the note, the KBW analysts apply a World Bank method for studying cycles of regulation and de-regulation of national economies to the U.S. banking sector. They point out that these cycles follow regular patterns, like the stages of grief....MORE