Megabanks Have Living Wills. Regional Banks Need Them Too.
The crisis that began with Silicon Valley Bank showed how all institutions with more than $100 billion in assets should follow the same rules on capital requirements and breakup plans.
Shuttered.
Photographer: David Paul Morris/Bloomberg
In the 2008 financial crisis, the US government had limited options: Either bail out large, interconnected financial firms that were failing — or risk widespread financial instability. It had little choice but to opt for the former.
After the crisis, banking regulators wisely made the megabanks more resolvable, through separability requirements established in so-called living wills and by requiring them to hold sufficient capital to ensure they could survive crises (known as “total loss absorbing capacity,” or TLAC).