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Your support makes all the difference.Outlook If one argues, as I have, that megabanks should be broken up to make the financial system safer, banking lobbyists begin to emit an excruciating, whining noise.
"But big companies need big banks," they drone. "Dismantle the megabanks and you will kick away one of the pillars supporting global capitalism."
To see what nonsense this is, consider the details of the $24bn (£15bn) private-equity bid for US computer maker Dell announced this week. If there was any truth in the argument of the banks' PR men, one would expect this massive deal to be underwritten by one of the global megabanks. After all, that's why they have those trillion-dollar balance sheets isn't it? Think again.
In fact, no less than four large banking groups are providing the debt financing for the deal: Bank of America/Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets. It's standard practice. No bank, not even these leviathans, want the risk of having so much of a single company's debt on its books, even for a short time. This plainly explodes the justification for the megabanks.
Does anyone seriously believe the world would end if these debt issuances were handled by, say, eight banks rather than just four?
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