TOO INVOLVED TO FAIL?

TOO INVOLVED TO FAIL? (COMMENT). Elmer commented here that if a bank is too big to fail, perhaps it’s too big. It’s not just the size of a bank that makes it a candidate for a rescue. Involvement in complex transactions also makes a bank a candidate for rescue. That is, if a bank is involved enough in many-sided interlinked transactions, it may be rescued to forestall the pain of unwinding those transactions. And so, ironically, banks which have been most involved in the complex risk taking that has caused so much trouble are more likely to be candidates for rescue.

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  1. Pingback: TOO BIG TO BE COMPETENT? | Pater Familias

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