NY Fed: Solving the Too Big to Fail Problem


Weekend, interesting reading

What Is the Too-Big-to-Fail Problem?
The root cause of “too big to fail’ is the fact that in our financial system as it exists today, the failure of large complex financial firms generate large, undesirable externalities. These include disruption of the stability of the financial system and its ability to provide credit and other essential financial services to households and businesses. When this happens, not only is the financial sector disrupted, but its troubles cascade over into the real economy.

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