World’s biggest banks to borrow $1.2T to avoid another collapse

The era of ‘Too Big to Fail’ is over — in just seven years.

The world’s 30 biggest banks will have to borrow about $1.2 trillion from Wall Street investors in order to prevent the kind of financial implosion that came in 2008 in the wake of the collapse of investment bank Lehman Brothers.

The requirements for total-loss absorbing capital, or TLAC, from the Swiss Financial Stability Board come in addition to the Dodd-Frank financial reform rules that required banks to hold billions of dollars in financial cushions.

“Maybe it’s the beginning of the end of ‘Too Big to Fail,’ which wouldn’t be a bad thing to be subject to all the time,” Ernie Patrikis, partner at White & Case, told The Post.

The rules are aimed squarely at the world’s largest banks, including JPMorgan, Bank of America and Goldman Sachs.

The amount the lenders have to raise will vary based on the risk level of the assets they hold, but will be at least 18 percent of those holdings.

While Wall Street has been setting aside money to cushion against another systemic failure, banks will probably raise the rest of the money by selling debt to hedge funds and other investors, Patrikis said.

-NYPOST