Financial Institutions
Introduction
This discussion covers the major policy discussion regarding the size of financial institutions. With very large financial institutions, we have had the need for government intervention when certain banks were in severe financial difficulty. In the financial crisis of the 2007-2009, one of the issues was "Too Big to Fail," where a number of banks were deemed to be too important for the economy to let them fail and the government provided substantial loans to support these banks.
Resources
- Website: OCLS
- Textbook: Macroeconomics
- Textbook: A Guide to Everyday Economic Statistics
Instructions
- This workshop is very timely, since there continues to be considerable discussion on the appropriate level of government regulation in the financial markets.
- Do an OCLS search on the concept of "Banks too Big to Fail."
- Post a citation and a short summary of the article
- Describe the problem from the standpoint of how concentration of market power in very large banks affects the overall economy.
- Make observations regarding how this affects individuals and businesses.