Some Observations on How to Deal with the Problem of “Too big to fail/save/resolve” Jan Kregel

The current approach to the financial crisis, of resolving small- and medium-size banks through the FDIC while giving direct and indirect government support to the banks that are considered too large to be wound up, has created an even smaller number of even larger banks. However, there are at least three separate problems associated with bank size that suggest that this approach may not reduce the systemic risks of large financial institutions that contributed to the current crisis.

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