Too-Big-To-Fail

Too-Big-To-Fail

Describing a concept or policy that certain companies are so systematically important to an economy that the government must intervene if they are in danger of bankruptcy or other failure. The idea behind a too-big-to-fail policy is that these companies do business with too many other companies, and their failure will cause a cascade effect adversely impacting the economy on a grand scale. Supporters of too-big-to-fail policies argue that they maintain economic stability, while critics allege that they encourage unnecessary risk taking.
References in periodicals archive ?
Our finding that the largest banks, the largest nonbanks, and the largest nonfinancial corporations all benefit from a discount relative to their smaller peers in the bond market can be interpreted as some support for the view that the too-big-to-fail status does not apply solely to banks.
On the issue of ending too-big-to-fail, the FSB last week put forward a proposal on total loss-absorbing capacity, otherwise known as TLAC, for globally systemically important banks.
That is the key pending aspect on ending too-big-to-fail," said Andres Portilla, director of regulatory affairs at the Institute of International Finance, a Washington-based banking and insurance lobby.
This legislation deals with the small number of very large banks which otherwise might still be too-big-to-fail, too-costly-to save, too-complex-to-resolve," Michel Barnier, EU Commissioner for internal market and services, told a press conference presenting the proposals.
The country's four largest providers Barclays, Royal Bank of Scotland, HSBC and Lloyds have cashed in on a too-big-to-fail government subsidy, claim the think-tank the New Economics Foundation.
He waged public battles against regulators who correctly argued for regulating derivatives and disparaged the comments of a prominent economist who early on identified risks in the too-big-to-fail banking system.
We are building more resilient financial institutions, making substantial progress towards ending too-big-to-fail, increasing transparency and market integrity, filling regulatory gaps and addressing the risks from shadow banking.
There's finally a healthy discussion in Washington about how to end too-big-to-fail banks.
They then present the Dallas Federal Reserve recommendations on how too-big-to-fail can be remedied.
There has been "substantial progress but more progress to be made," Lew said in open remarks on too-big-to-fail and on FSOC's progress.
What I want to do in this review is to use the books' analyses of AIG and Merrill Lynch to give some insight into how large financial institutions are run, their risks, why some of them failed in the recent crisis, and the implications for too-big-to-fail policy.
The too-big-to-fail reform project is massive in scope.