WASHINGTON Feb 28 Any too-big-to-fail subsidy
shielding big banks from market discipline and effective
regulation would be a problem that financial regulators would
need to address, Federal Reserve Governor Sarah Bloom Raskin
said on Thursday.
Raskin was asked at a conference in Atlanta about recent
reports that the biggest banks are able to borrow money at lower
rates because markets believe the U.S. government would bail
them out if they were to fail.
She said she had not taken a close look at the calculations,
which were conducted by Bloomberg View, but that such a subsidy
would be problematic.
"If there is in fact a perception that there is this subsidy
- that essentially the market believes exists that keeps big
institutions from sort of being reined in by the forces of good
discipline, good supervision, good regulation - then I think
that is a problem," Raskin said.
"That is a source in and of itself of financial instability
that I think any good regulator is going to want to focus on,"