Banks remain “too big to fail” a decade on from Lehman Brothers’ collapse, according to one of the world’s main policy makers, sounding a warning days after Gordon Brown said the world is “in danger of sleepwalking” into a crisis.
Discussing the lessons learned from the crash ten years on, OECD chief Angel Gurria told France 24 that while the finance sector understands “what is at stake a lot better than before” and there’s been various improvements, the lesson about size hasn’t really sunk in.
“Have we learned from the question of size? Not really, in fact the ‘too big to fail’ syndrome appears to still be there,” he said. “The banks are becoming very large; there’s mergers, absorption of other smaller banks.”
‘Too big to fail’ became the catchphrase of the crisis after some banks were deemed too large and important to be allowed to go under, forcing governments to bail them out. Banks have since been forced to build up their capital buffers.
“One feels more comfortable with the financial system [now],” added Mr Gurria. “You really feel today the problem is in the political sphere rather than the macro or policy sphere.”
His comments came days after former British prime minister Gordon Brown said: “There has not been a strong enough message sent out that government won’t rescue institutions that haven’t put their houses in order.”