CLICO and CIB took on excessive maturity mismatches while failing to build adequate liquidity asset buffers;  •  capital, therefore, was inadequate as a buffer against the sharp drop in asset prices, especially a rapid fall in methanol prices (a major source of dividends for the Group) and plummeting real estate values;  •  the interconnectedness of institutions meant that these shocks were propagated across the Group, both in Trinidad & Tobago and the Caribbean; and  •  CL Financial enjoyed the benefits of being “too-big-to-fail.” The implicit understanding was that if the Group ran into difficulties, the government would step in to prevent a systemic crisis.
This made the too-big-to-fail problem even bigger. No one really knew what exactly needed to happen if a large systemically important institution became insolvent. At the end of the day, the decision to either bailout an institution or let it go bankrupt became a political not economic one.