Too Much “Too Big to Fail”?
Excessive focus since the financial crisis on institutions that are “too big to fail” may reflect a belief that, by identifying and correcting some crucial market failure, we could, at last, achieve a stable and self-equilibrating system. But many of the problems that led to the crisis – and that could do so again if left unaddressed – originated elsewhere.
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LONDON – Obviously, the global financial crisis of 2008-2009 was partly one of specific, systemically important banks and other financial institutions such as AIG. In response, there is an intense debate about the problems caused when such institutions are said to be “too big to fail.”