Tucker: US banks would not need taxpayer bailout

FIVE years on from the government’s enormous intervention to bail out the UK financial system, the Bank of England’s deputy governor has said that US banks can survive without taxpayer assistance.

Speaking in Washington DC, Paul Tucker, who will soon step down from his position at the Bank, said that the American financial system has reached a point at which a bank failure would not require an expensive government rescue, calling an end to the problem of banks being “too big to fail”.

Tucker said: “I cannot see how the US Administration could persuade congress to provide taxpayer solvency support.”

The deputy governor also expressed his confidence in banking systems outside of the US: “Europe has not yet reached the same point, but contrary to some commentary is not far behind. The necessary legislative regime is close to completion.”

The speech also addressed the use of bail-in strategies to resolve bank failures, stressing that all creditors could have to absorb losses in the result of a collapse, and that only the hierarchy of losses was important.

Tucker concluded: “The necessary technology is clear. The necessary restructuring of firms is clear. The necessary degrees and forms of cross-border co-operation are clear. It is a matter of: just do it.”