To take one example, a major part of JPMorgan is identified as a British corporation that is a subsidiary of the United States depository bank, which itself is then a subsidiary of JPMorgan. All depend on an Indian company for daily operations.
Clearly, the process of simplifying corporate structures still has some way to go. But some additional thinking needs to go into the resolution process.
G.E. to Retreat From Finance in Post-Crisis Reorganization
General Electric plans to sell off most of its finance arm over the next two years, redefining the multinational conglomerate as it seeks to complete a transformation begun amid the tumult of the financial crisis.
In addition to huge planned sales of assets outlined by the company on Friday, G.E. will take other significant steps, including bringing back about $36 billion in cash that now resides overseas.
.. For years, the financial tilt looked smart and relatively easy. In an interview in 2010, Mr. Immelt recalled, if a deal looked like a money spinner, it got the nod. “And you don’t have to build a factory,” he observed.
Yet the big bet on finance badly wounded G.E. in the wake of Lehman’s demise, when the market upheaval left the conglomerate hard-pressed to borrow debt for its day-to-day operations.
.. Perhaps one of the most notable potential consequences of the drastic move is that G.E. will be able to shed its designation as a “systemically important financial institution.” Such status comes with high requirements to keep capital on hand, potentially limiting its financial returns.
The Right Way to Control the Banks
Rather than interfere with how banks operate, as does the Volcker Rule or proposals to break up large banks, such requirements restrict only the way banks finance themselves.
.. Some analysts think the costs of the financial crisis in the United States are more than $13 trillion, almost a full year’s GDP.11
.. Such implicit and explicit subsidies for banks that are thought to be too big and too important to be allowed to fail enable them to borrow more cheaply. Bank of England calculations reported by Andrew Haldane, its director for financial stability, show that these subsidies for the world’s twenty-nine most significant banks accounted for roughly half their profits from 2002 to 2007.