According to watchdog for government bailout program of United States, close relations between large financial company remains to be a threat to the economic stability even after five years following the financial crisis of 2008.
Inspector general for Troubled Asset Relief program said in a report that too large to flop is not just regarding the size- it is regarding the interconnections that huge financial companies have with the American households. Finishing too large to fail is vital to safety of financial system.
Discussion in Washington on whether Dodd-Frank financial overhaul law will be ending the taxpayer funded bails was reenergized after the United States lawyer General Eric Holder told previous month that the dimension of leading banks has now made it hard for Justice Department to carry criminal charge when there is any type of wrong deeds.
The undersecretary of Treasury Department for the domestic finance, Mary Miller said last week in a speech that the idea that certain banks are too immenseto be permittedto flopis not correct. No financial firm, regardless of the dimensionwill be bailed by taxpayers.
Banks with over five hundred billion dollarsin asset would be facing high capital standards meant for lessening risk and finish an indirectsubsidy for the largest lenders under the bill to be presented by the United States senators,David Vitter, a Republican of Louisiana and Sherrod Brown, a Democrat of Ohio.
Special inspector general, Christy Romero said in a reportthat regulators should utilize the purportedliving wills in order to avoid future crisis as well as bailout. Living wills can be defined as the plans that would be assisting various regulators set upthe financial firm for future bankruptcy.
The report also stated that the banks that had left TARP through Small Business Lending Fund, have not increased the lending process to small companies and are vitally underperforming when compared to the banks that are non-TARP in Small Business Lending Fund. This program has been regarded as a missed opportunity for increasing lending. Apart from this, the report also stated that the Treasury program also injects large amount ofmoney into several banks for the purpose of lending to small companies.
Treasury said on a 28 March letter which was meant for Romero that the Small Business Lending Fund has attained huge success and several banks in program have made a vital progress in rising small trade lending.