No bank should be “too big to fail,” and the financial crisis in 2008 demonstrated that financial reforms were necessary to prevent taxpayers from ever again having to step in to prevent a systemic failure. In response, the chances of a large banking organization failing have been greatly reduced by higher levels of and better quality of capital and liquidity, central clearing and other efforts to reduce risk; if a banking organization should fail, a new legal regime imposes losses from failed institutions on shareholders and creditors without government “bailouts.” However, as evidenced at the Minneapolis Federal Reserves’ recent Ending Too Big to Fail Policy symposium, some scholars have chosen to ignore the reality of these seismic changes. They continue to propagate myths that are inconsistent with reality.
You Might Also Be Interested In...
Bank Conditions and Credit Availability
Time To Return To the Regular Rulebook – Economic Uncertainty Is Not Extraordinarily Elevated
Monetary Policy
The Fact that Big Banks’ Stock Prices Got Hammered This Spring Hardly Proves They are TBTF
More Posts by This Author
Bank Conditions and Credit Availability
Time To Return To the Regular Rulebook – Economic Uncertainty Is Not Extraordinarily Elevated
Monetary Policy
The Fact that Big Banks’ Stock Prices Got Hammered This Spring Hardly Proves They are TBTF