There is a time for weighing evidence and a time for acting. And if there's one thing I've learned throughout my work in finance, government, and conservation, it is to act before problems become too big to manage.
No bank should be too big or too complex to fail, but almost any bank is too big to liquidate quickly, particularly in the midst of a crisis.
Interpretation
What this quote means
Financial institutions should be manageable enough to fail without causing systemic chaos, yet current conditions often prevent their quick liquidation during crises.
Henry Paulson's quote emphasizes the importance of regulation and oversight in the banking industry, highlighting that while no bank should be considered too large to fail, the reality is that during a financial crisis, the complexity and size of banks can lead to significant difficulties in liquidating them swiftly. This speaks to the need for a balanced approach to banking regulation, ensuring that banks can operate effectively without posing a risk to the broader financial system.
Themes
In practice
Example use cases
This quote can be used in a finance seminar to discuss the risks associated with large banks.
More from Henry Paulson
All quotes βIn all my life, I've been trained that when there's a big problem, you run toward it.
Complexity and interconnectedness matter as much as size in assessing risk in banking.
Every global concern - economic, environmental or security-related - can be addressed more effectively when the U.S. and China work together.
I think history shows that countries have to have some kind of a threshold level of economic success before they begin to have the means and the will to focus on the environment.
I've always said to everyone that ever worked for me, if you get too dug in on a position, the facts change, and you don't change to adapt to the facts, you will never be successful.
Similar quotes
To get back to the kind of shared prosperity and upward mobility we once considered normal will require another era of fundamental reform, of both our economy and our democracy.
Yes, over the centuries economic progress has reduced some gross disparities - modern Americans are relatively unlikely to simply starve to death (though it can happen), so in that sense the gap between rich and poor has narrowed. But the question isn't whether society is, in some sense, more equal than it was in 1900. It's whether it is radically more unequal than it was in 1970. And of course it is.
How can government reduce the frequency and the severity of future catastrophes? Companies that have the potential to create significant harm must be required to pay for the costs they inflict, either before or after the fact. Economists agree on this general approach. The problem is in putting such a policy into effect.
Competition is the most promising means to achieve and secure prosperity. It alone enables people in their role of consumer to gain from economic progress. It ensures that all advantages which result from higher productivity may eventually be enjoyed.
China's government has far more control over the country's economy than our government has over ours, and it is moving from export dependence to a model of growth driven by domestic demand. Any restriction on exports to the U.S. would simply accelerate a process already underway.
War can really cause no economic boom, at least not directly, since an increase in wealth never does result from destruction of goods.