Banks are now too big for their own good, as a result of the economic crisis, and actually contain the seeds of the next economic crisis, George Magnus, UBS senior economic adviser, told CNBC Wednesday.
Magnus isn’t concerned with the size of the sector, “it’s about the size of individual institutions.” Politicians aren’t highlighting “the fact that these banking behemoths are too big for our own good and actually that they contain the seeds of the next crisis and the systemic risk,” according to Magnus.
"If the banks were too big before, they became even bigger as a consequence of the crisis,” he said, adding that he doesn’t get the feeling that leaders have the “courage to actually take on the banking systems and make them viable.”
He said the returns of leverage, the new securitized products being proposed by Wall Street banks, and the compensation practices are all products of increasingly big banking institutions with “too little competition.”
-Watch the full interview with George Magnus above