Measuring the Costs of “Too Big To Fail”
Public discussion of banks that are "too big to fail" gravitates quickly to fairness concerns: Why should the big guys get bailed out when debt-distressed homeowners face foreclosure? But the costs associated with too-big-to-fail banks include more serious problems, namely spillover effects that weaken the entire economy.
https://prosyn.org/NxBjQSz
CAMBRIDGE – The idea that some banks are “too big to fail” has emerged from the obscurity of regulatory and academic debate into the broader public discourse on finance. Bloomberg News started the most recent public discussion, criticizing the benefit that such banks receive – a benefit that a study released by the International Monetary Fund has shown to be quite large.