Dodd-Frank and TBTF - Bigger but not really Better

Institutional Investor Magazine has published a short piece on Dodd-Frank, as it approaches  its 5-year anniversary next month, entitled Bigger, not Better.   Author Julie Segal points out the irony that large US banks dominate in financial serves like never before, notwithstanding the passage of this legislation which in part is designed to slim down risky activities.  One Wall Street analyst reckons that the regulation has "encouraged finance to incrementally move outside the regulated industry", an un-intended consequence.   Segal interestingly posits that the bigger banks gain economies of scale when it comes to meeting the growing volumes of regulatory and compliance requirements in the post crisis financial landscape. 

Essentially, the material costs of such requirements can be allocated across a broader business base, effectively favouring the big shops on Wall Street.  The article also rightly argues that significant parts of Dodd Frank have not yet been implemented, such as the phasing in capital and liquidity requirements (although I would note many banks have done much work here even if not a formal requirement for another couple of years) as well as finalising a net stable funding ratio and surcharge levels for dollar funding. 

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