He also had some interesting remarks about the sovereign debt crisis and competitiveness so click through and read the entire article. Concerning the financial reform, Roubini is still concerned that it is not enough and is too mild to address some key problems. The "economies of scale" argument has always sounded bogus to me whether in banking or any other industry. How well has that really worked out for consumers? It's great for the mega-deal makers who take their cut but otherwise it presents more problems than solutions. CNBC:
“We need more radical reforms," he added. "The idea that we’ll be able to close down an institution like Goldman (Sachs) in an orderly way—a business that operates in nearly a hundred countries—is absurd.”
Roubini, an NYU professor who has been called "Dr. Doom" for his dire economic outlook, said the three main problems with big banks like Goldman were that they were 1) Too big to fail, 2) Too big to be bailed out and 3) Too big to be risk managed.
Attempting to manage the risk of the largest financial institutions is “mission impossible,” according to Roubini, a task that “even the most amazing risk manager can’t do” because financial institutions are far too complex.
“Experience has shown that ‘economies of scale’ achieved by the largest banks as a result of Glass-Stegall have been very small,” Roubini said. “The cost of being too big to fail has been much larger.”
