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Wednesday, June 30, 2010

Financial Reform Legislation Does Not Eliminate Too Big To Fail

I argue that financial reform legislation fails to remove an important advantage that large banks have over small banks:

Financial Reform Legislation Does Not Eliminate Too Big To Fail

If financial reform legislation passes in its present form, it will have positive features. It creates a relatively strong and independent consumer financial products protection agency, it forces most derivatives to be exchange traded or passed through clearinghouses -- though important exceptions remain -- and it provides regulators with resolution authority for large institutions in the shadow banking system. But overall, as with health care reform, the legislation is unsatisfactory in many ways -- it leaves much of the job yet to be done -- and it's not clear that Congress will have the will to follow through.

    Posted by on Wednesday, June 30, 2010 at 01:17 AM in Economics, Financial System, Regulation | Permalink  Comments (21)

          


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