Banks in the US and UK are planning a disaster recovery drill on Monday. What do you think they’re not telling us? Will this be a re-boot of the banks? Will this be the cover story for cleaning-out everybody’s bank account(s), like they did in Cyprus? -LW
October 10, 2014
Britain and the US will stage the first transatlantic simulation of a crisis in a large bank on Monday, in a sign of growing confidence that the authorities can now deal with the failure of large institutions.
All of the main players who would need to be involved in a failure of companies such as Bank of America, Goldman Sachs, Barclays or HSBC will gather in Washington DC to make sure they would know what to do, who to call and how to inform the public.
The move reflects the authorities’ view that they are getting close to solving the “too big to fail” problem, even for cross-border banks, outside a full-blown system-wide crisis.
George Osborne, UK chancellor, announced he would be taking part in the “war game” along with Jack Lew, US Treasury secretary, Janet Yellen, head of the Federal Reserve, Mark Carney, Bank of England governor and other senior officials from both countries.
The simulation will not mimic any particular banks but the authorities will run through the procedures they would follow if a large UK bank with US operations failed and those for a significant US bank with a British presence. Unlike domestic war games held before the financial crisis, Mr Osborne pledged to publicise the results.