The biggest U.S. banks are still too big to pass through an orderly bankruptcy without posing systemic risk to the financial system, said John Thain, chief executive officer of CIT Group Inc. (CIT:US)
“They are in fact still too big to fail,” Thain, the former CEO of Merrill Lynch & Co., said today in an interview with Bloomberg Television's Erik Schatzker. Still, “I do not think the right answer is to break them up,” he said.
The Federal Reserve and Federal Deposit Insurance Corp. yesterday told 11 of the largest U.S. and foreign banks, including JPMorgan Chase & Co. and Goldman Sachs Group Inc., that they had botched their so-called living wills. The agencies ordered the banks to simplify their legal structures and revise some practices to make sure they can collapse without damaging the financial system.
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