Britain’s elite might do something about TBTF in ten years time. Whoopee.

Mervyn King said two or three weeks ago, “I agree with Michael that banks are still too important to fail, or too big to fail. That is the single biggest challenge facing the new Prudential Regulation Authority. If I were to say what the objective is over the next five to 10 years for the Prudential Regulation Authority, it would be to ensure that, at the end of that period, we have genuinely solved the "too big to fail" problem.”

So what was the point of the hundreds of thousands of person hours and millions of pounds absorbed by the Vickers commission? Weren’t they supposed to sort out TBTF?

But of course Mervyn King is right. TBTF has not been solved. And it’s worse than that: Basel III isn’t much better than Vickers. As King put it,

“Basel III on its own will not prevent another crisis”

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P.S. (4^th April 2013). Bernanke said something similar. He said in relation to TBTF, that he “never meant to imply that the problem was solved and gone. It is not solved and gone; it’s still here, but there’s a lot of work in train.”

(Hat tip to Eva on Simon Johnson’s blog)