Yes, but that's a separate issue of shareholder governance. At present there isn't a legal power of criminal incompetence in charge of a financial institution to go after Adam Crozier, Fred Goodwin or Victor Blank for setting up businesses no safer for Britain than any number of industrial health and safety violations and personally riding the profits before the inevitable blow-up.
Given the British economy is so reliant on financial services this should perhaps be revised; we regulated factories in the past in spite of protestations of its expense and difficulty because we recognised it was in the best interests of society, and we should now be doing the same to finance. Too big to fail is privatising the profits while socialising the losses; it is too big to be private without enormous and mandated operator's liability insurance, funded by the owners.
Do you think there is any way of developing an objective "too big to fail" test that could be applied to these companies and actually give a realistic answer?
[Edit: I just noticed that the former auditor of RBS is now the Chairman of Deloittes!]
There's certainly a lot of the Old Boys Club about auditing and regulation, anecdotally...
Too big to fail? The boundary cases will always be the challenge but I suspect we could get started by mandating a limit to percentages of GDP under management, overall, sectorally and regionally.
Fundamentally though, the issue is one of liability and should be insured no matter what the size of the business against the cleanup costs. I suspect that would regulate out of existence whole sectors as simply too expensive to insure, but is that really worse than a systemic liability to the taxpayer of several multiples of GDP, as at present?
Given the British economy is so reliant on financial services this should perhaps be revised; we regulated factories in the past in spite of protestations of its expense and difficulty because we recognised it was in the best interests of society, and we should now be doing the same to finance. Too big to fail is privatising the profits while socialising the losses; it is too big to be private without enormous and mandated operator's liability insurance, funded by the owners.