ornelius:
Thank you for reading our post and for your comments. To the extent that there was a “subsidy,” the widening in the rating gap could be a sign of its reduction, consistent with rating agencies’ announcements of a decline in their expectation of government support in the event of financial distress/failure. However
MAKE A MONEY HERE... LOOK NEXT ... MAKE A MONEY HERE... LOOK NEXT ... MAKE A MONEY HERE... LOOK NEXT ... MAKE A MONEY HERE... LOOK NEXT ... MAKE A MONEY HERE... LOOK NEXT ... MAKE A MONEY HERE... LOOK NEXT ... MAKE A MONEY HERE... LOOK NEXT ... MAKE A MONEY HERE... LOOK NEXT ...
text
COMMENTS
You can follow this conversation by subscribing to the comment feed for this post.
Cornelius:
Thank you for reading our post and for your comments. To the extent that there was a “subsidy,” the widening in the rating gap could be a sign of its reduction, consistent with rating agencies’ announcements of a decline in their expectation of government support in the event of financial distress/failure. However, the absence of a similar widening in bond and CDS spreads is not consistent with such a reduction. It would be interesting to extend the analysis to the next tier of institutions, as you suggest, but data availability limits our ability to implement this idea.
Greetings--
Thanks for this research.
There is much talk of the TBTF "subsidy" enjoyed by several banks and BHCs. The subsidy is a main component of pending legislation addressing the TBTF problem. (H.R. 493)
I'd be interested in what the authors (and others) say about whether their analysis helps in determining the existence or the magnitude of the subsidy.
Perhaps for contrast an identical study should be conducted for the next tier of non-TBTF banks and BHCs.
With appreciation.
CKH