It wasn’t too long ago that Canada’s largest banks pined for membership in the exclusive and powerful club of the world’s largest financial giants. Now that the 2008 financial meltdown is transforming megabanks from once-mighty emblems of national pride to international pariahs, they could well end up becoming fixtures among their global peers.
In recent weeks, there’s been a major push to restructure megabanks with new regulations beyond internationally accepted capital standards. The reforms being proposed are intended to dramatically overhaul banks by preventing them from taking excessive risks, protecting consumer deposits from risky trading activity, and reducing the threat to the financial system and the economy should a big bank get into trouble. In other words, financial institutions targeted as too-big-to-fail are being reconfigured into entities that are less hazardous for consumers and taxpayers, even if it results in a banking sector that’s less profitable for investors.
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