Watching the heads of several major US banks — JPMorgan Chase, Bank of America and Citigroup — being grilled in front of Congress last week, I couldn’t help but be reminded of that familiar image of downcast chiefs of systemically important financial institutions on the Hill following the 2008 crisis.
This time around, politicians wanted to know not what Wall Street had done wrong, but what they were planning to do right should there be another crisis, either geopolitical (yes, the bank heads would pull out of China if Taiwan was invaded) or financial.
All of it underscores that 15 years on from the great financial crisis, there’s still plenty of risk in the market system — it’s just coming from different places. Consider, for example, current worries about Treasury market liquidity. As the October 2014 flash crash, the September 2019 repo market pressures and the March 2020 Covid-related dislocations have shown, the ultimate “safe” market has ended up being quite fragile in times of stress.