Crs Report for Congress: Systemically Important or Too Big to Fail Financial Institutions
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Although "too big to fail" (TBTF) has been a perennial policy issue, it was highlighted by the near-collapse of several large financial firms in 2008. Financial firms are said to be TBTF when policymakers judge that their failure would cause unacceptable disruptions to the overall financial system, and they can be TBTF because of their size or interconnectedness. In addition to fairness issues, economic theory suggests that expectations that a firm will not be allowed to fail creates moral hazard-if the creditors and counterparties of a TBTF firm believe that the government will protect them from losses, they have less incentive to monitor the firm's riskiness because they are shielded from the negative consequences of those risks.
Format:Paperback
Language:English
ISBN:1293273031
ISBN13:9781293273036
Release Date:November 2013
Publisher:Bibliogov
Length:60 Pages
Weight:0.28 lbs.
Dimensions:0.1" x 7.4" x 9.7"
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