Hand it to the UK. Under pressure from the wonks in Brussels – I suppose there is something to being ruled by unaccountable political science PhDs – the government has taken the first, halting steps toward breaking up three of its largest financial institutions:
The British government — spurred on by European regulators — is set to force the Royal Bank of Scotland, Lloyds Banking Group and Northern Rock to sell off parts of their operations. The Europeans are calling for more and smaller banks to increase competition and eliminate the threat posed by banks so large that they must be rescued by taxpayers, no matter how they conducted their business, in order to avoid damaging the global financial system.
A for effort, and as Simon Johnson quite optimistically suggests, perhaps this could nudge the Bernanke/Summers/Geithner crew to reconsider its determination to preserve the corporate forms of America’s major financials. But is this really the best way to go about it? (more…)