تجزیه و تحلیل طرح های پیشنهادی برای حداقل کردن بدهی های فرعی

Increasing market discipline has emerged as a major policy issue for banking regulators. The most prominent proposals for increasing market discipline would require banks to issue subordinated debt to the public. This paper explores the fundamental rationale behind mandatory subordinated debt proposals and their advantages and disadvantages. Our analysis indicates that a subordinated debt requirement will only modestly increase the risk sensitivity of bank costs at most large banks; however, we argue that there are substantial benefits to using subordinated debt as a market-based trigger for regulatory action.

Increasing the effectiveness of market discipline in regulated financial markets has emerged as a major policy issue for banking regulators. For example, the recent Basel Committee consultative paper on reforming the international regulatory framework for bank capital cites market discipline as one of three pillars of the regulatory framework. Perhaps the most prominent and potentially far-reaching proposal for increasing market discipline would require banks to issue publicly held subordinated debt that is unsecured, uninsured, and junior to bank deposits. While the recently passed Gramm-Leach-Bliley Act doesn’t require banks to issue subordinated debt, it requires the 50 largest banks to issue long-term, unsecured debt rated in one of the top three investment grades if these banks control a financial subsidiary. National banks among banks ranked 51 to 100 in size must meet the same or “comparable standards” to control a financial subsidiary. However, the Gramm-Leach-Bliley Act does not require the debt to be publicly held.

Making subordinated debt mandatory will have two benefits. First, a bank’s market cost of funds will be more sensitive to risk. Second, yields on the debt will provide market-based signals for regulatory action. In our view, the first of these gains is likely to be minimal at large U.S. banks. In the absence of government bailouts, the existing uninsured creditors at most large banks have significant market incentives to monitor and control bank risk-taking. Conversely, subordinated debt will add little to a bank’s cost of funds if governments routinely bail out most of the creditors of large banks. While subordinated debt does generate some market discipline advantages over other types of uninsured bank liabilities, we do not believe that there will be a substantial increase in the sensitivity of bank costs to risk-taking resulting from a mandatory subordinated debt requirement at large banks.