March 25, 2009

Are we multiplying the systemic risk?

Sir I agree completely with Martin Wolf´s concluding reaction “If this is not frightening, I do not know what is” “Why a successful US bank rescue is still so far away” March 25.

Now, that said, one of the things that I find most frightening is the possibility that we could be concentrating too much our efforts on salvaging (or lynching) the Titanics instead of making sure that all other smaller vessels are doing fine. In other words, by insisting on helping all the “systemically significant financial institutions” are we not making these even more systemically significant?

What do we know about all the other regional and smaller community banks? Should we not care about these more?