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Monday, August 4, 2014

Wall Street Subsidies Silently Magnifying Systemic Risk

At a U.S. Senate hearing on a GAO report on the costs of expectations of government support for banks should they go under, “discussion went far beyond the report and delved into the current state of banking, the limits of the Dodd-Frank Act and what should be done about banks that are simply too big to manage,” according to The New York Times.[1] Six years after the massive credit freeze, a major question hinged on whether some financial institutions were still too large, complex, and interconnected to be liquidated in an orderly and containable manner should they head under water. 


[1] This and all quotes in this essay are from Gretchen Morgenson, “Big Banks Still a Risk,” The New York Times, August 3, 2014.