Too Big to Fail: The Ongoing Debate

The 2008 financial crisis forced governments to rescue banks deemed too big to fail. Taxpayers bailed out institutions that had caused the crisis through excessive risk taking.

The Dodd Frank Act attempted to end too big to fail through resolution authority, living wills, and higher capital requirements. But the largest banks have grown even larger since 2008.

The 2023 failures showed that mid sized banks can also pose systemic risks. The debate continues: should big banks be broken up, regulated more tightly, or allowed to fail? No major bank executive went to prison after 2008, fueling populist anger on left and right..