{"id":41165,"date":"2011-11-02T11:45:20","date_gmt":"2011-11-02T16:45:20","guid":{"rendered":"http:\/\/media.lclark.edu\/content\/hart-landsberg\/2011\/10\/29\/too-big-to-fail\/"},"modified":"2012-01-08T15:16:16","modified_gmt":"2012-01-08T20:16:16","slug":"how-did-banks-get-too-big-to-fail","status":"publish","type":"post","link":"https:\/\/thesocietypages.org\/socimages\/2011\/11\/02\/how-did-banks-get-too-big-to-fail\/","title":{"rendered":"How Did Banks Get “Too Big To Fail”?"},"content":{"rendered":"

Our financial system is dominated by banks considered too big to fail.\u00a0 And that is a problem for the rest of us.\u00a0 As Time m<\/em>agazine explains<\/a>:<\/p>\n

\u201cToo big to fail is opposed by the right and the left, though not apparently by the people drafting legislation,\u201d says Simon Johnson, an MIT professor and the author of a recently published book on the subject, 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown<\/em>. \u201cThe current financial-reform bills are effectively a wash on the issue.\u201d<\/span><\/p>\n

<\/span>The question is how large banks ought to be allowed to become. When large banks run into trouble, regulators are often unwilling to let them fail, as bank failures can wipe out individual depositors. What\u2019s more, banks often fund their operations by borrowing from other banks. The bigger the bank, the more likely it is to put other banks at risk if it fails. Mass bank failures, especially of big banks, means people can\u2019t get loans. And no loans, no economy. <\/span><\/p>\n

<\/span>That\u2019s why the government decided to bail out most of the nation\u2019s largest banks at the height of the financial crisis. And here\u2019s where the problem potentially gets worse. Once bankers understand that the government will bail out their firms when their loans or other financial bets go bad, they are likely to take riskier and riskier bets. That, of course, leads to more potential bank failures \u2014 and more taxpayer-funded bailouts.<\/span><\/p><\/blockquote>\n

Not only have attempts at reform largely failed, government regulators have often tried\u00a0to paper over financial problems by encouraging our dominant banks to swallow smaller, less stable ones, thereby worsening the problem.<\/p>\n

So, who are our\u00a0\u201dtoo big to fail\u201d banks and how did they get so big?\u00a0\u00a0Here<\/a> is a time line that charts\u00a0the\u00a0process and highlights the winners.<\/p>\n

\"328240_139434879491415_100002747126914_140493_2014881848_o.jpg\"<\/a><\/p>\n

Of course there are answers to\u00a0this \u201ctoo big to fail\u201d problem.\u00a0 One is\u00a0turning our banks into\u00a0public\u00a0utilities<\/a>.\u00a0 Here<\/a> is Yves Smith talking about this solution:<\/p>\n

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Our financial system is dominated by banks considered too big to fail.\u00a0 And that is a problem for the rest of us.\u00a0 As Time Magazine explains:
\n“Too big to fail is opposed by the right and the left, though not apparently by the people drafting legislation,” says Simon Johnson, an MIT professor and the author of […]<\/p>\n","protected":false},"author":1853,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[36,98,85,304],"class_list":["post-41165","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-economics","tag-capitalism","tag-politics","tag-the-state"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts\/41165","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/users\/1853"}],"replies":[{"embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/comments?post=41165"}],"version-history":[{"count":6,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts\/41165\/revisions"}],"predecessor-version":[{"id":41173,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/posts\/41165\/revisions\/41173"}],"wp:attachment":[{"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/media?parent=41165"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/categories?post=41165"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thesocietypages.org\/socimages\/wp-json\/wp\/v2\/tags?post=41165"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}