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"Too Big to Fail"

Discussion in 'Business & Economics' started by Patrick Henry, Apr 18, 2009.

  1. Patrick Henry

    Patrick Henry New Member

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    NPR, 2009 April 17

    Gary Stern and Ron Feldman, colleagues at the Federal Reserve Bank of Minneapolis, say they've worried for years about banks growing "too big to fail."

    As explained in their book titled, "Too Big to Fail: The Hazards of Bank Bailouts", Feldman and Stern explain that as banks and other financial institutions grow larger, they tend to take more risks than if they weren't too big to fail, assuming that the government would step in and bail them out.

    They also couldn't help but notice that their predictions have come true as AIG, Fannie Mae and Freddie Mac, as well as other major banks that have been "too big to fail" have been bailed out by the government.

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