Fostering opacity

'Too-big-to-fail' is not just a moral hazard problem, it positively fosters dangerous opacity, argues David Rowe

In a past career, when I had difficulty finding simple information such as staff locations, I was fond of saying: "We are so secure, even we don't know what we're doing!" Little did I think I might eventually find more truth than humour in this quip.

For at least the past 10 years, regulators have worked under the assumption that risk management in large global financial institutions was more effective than in smaller competitors. The implicit argument was that, with greater critical mass, large