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A law professor’s perspective on ‘too big to fail’

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  • Roberta S Karmel

Abstract

During the financial crisis of 2008 the US financial system was saved by government bailouts of the largest banks. Further, these already oversized banking institutions increased in size. The reaction of the US Congress was to pass the Dodd–Frank Act, but this statute has only three provisions that address the possible downsizing of the big banks, and they are insufficient to accomplish the reform required to end ‘too big to fail’. This article recommends that the big banks be broken up pursuant to a specialized mandate based on the techniques used to break up the public utility holding companies after the 1929 stock market crash. Size standards and activity restrictions should be employed as standards in this type of an anti-trust initiative.

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  • Roberta S Karmel, 2014. "A law professor’s perspective on ‘too big to fail’," Journal of Banking Regulation, Palgrave Macmillan, vol. 15(3-4), pages 227-234, September.
    • Handle: RePEc:pal:jbkreg:v:15:y:2014:i:3-4:p:227-234
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    Cited by:

    1. Joachim Erhardt & Johannes Lübbers & Peter N Posch, 2017. "Bail-in and asset encumbrance - Implications for banks’ asset liability management," Journal of Banking Regulation, Palgrave Macmillan, vol. 18(2), pages 149-162, April.

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