Hong Kong Wrestles with Problem of Too Big To Fail Banks

By Evan Abrams 

Working in conjunction with the Financial Stability Board, Hong Kong has set out to update its financial industry laws and regulations. While the new law would give policy makers a variety of options to deal with failing institutions, it would allow the government to bailout a variety of banks, brokerages, and insurers if they believe a failure could trigger a systemic collapse. While the bailout provisions may prove unpopular, many observers feel the law is necessary for Hong Kong to remain a competitive and attractive financial hub. The bailout provision may be particularly hard for Hong Kong residents to swallow, because the majority of the island’s financial institutions are foreign companies. See more here from the South China Morning Post.