Almost All of the systemic risk was caused by regulation. Too big to fail messed up with "the role of market discipline in financial markets" (3rd pillar of Basel II). Firms were even picking their own regulators (through loopholes) so they got the most lax ones. And so on.
I actually think that---since we cannot regulate for every contingency---then it's much better to avoid having too big to fail firms.
> then it's much better to avoid having too big to fail firms.
If a company that is, say 10x the size of Goldman Sachs, is "too big to fail" and therefore too big to allow to exist, what does that tell us about the US govt?
Comments
Almost All of the systemic risk was caused by regulation. Too big to fail messed up with "the role of market discipline in financial markets" (3rd pillar of Basel II). Firms were even picking their own regulators (through loopholes) so they got the most lax ones. And so on.
I actually think that---since we cannot regulate for every contingency---then it's much better to avoid having too big to fail firms.
> then it's much better to avoid having too big to fail firms.
If a company that is, say 10x the size of Goldman Sachs, is "too big to fail" and therefore too big to allow to exist, what does that tell us about the US govt?