Too Big to Fail The Hazards of Bank Bailouts

by Stern, Gary H.; Feldman, Ron J.; Volcker, Paul A.,

• ISBN13: 9780815781523
• ISBN10: 0815781520
• Format: Hardcover
• Copyright: 2004-02-29
• Publisher: Brookings Institution Press

Summary

Two senior officers with the Federal Reserve argue that, despite public pressure to prevent large banks from failing, the government should not provide bailouts. They recommend a series of reforms to reduce expectations of bailouts.

Author Biography

Gary H. Stern is president and chief executive officer of the Federal Reserve Bank of Minneapolis Ron Feldman is a vice president at the Federal Reserve Bank of Minneapolis

Table of Contents

Foreword by Paul A. Volcker	vii
Preface	xi
1 Introduction: Our Message and Methods	1	(8)
ONE WARNINGS	9	(78)
2 What Is the Problem?	11	(12)
3 Why Protection Is Costly	23	(6)
4 How Pervasive Is TBTF?	29	(14)
5 Why Protect TBTF Creditors?	43	(17)
6 The Growth of TBTF Protection	60	(20)
7 Testing Our Thesis: The Cases of Not Too Big to Fail	80	(7)
TWO OPTIONS	87	(62)
8 Can the Problem Be Addressed?	89	(9)
9 Creating the Necessary Foundation	98	(13)
10 Reducing Policymakers' Uncertainty	111	(13)
11 Limiting Creditor Losses	124	(8)
12 Restricting Payment System Spillovers	132	(9)
13 Alternatives for Managing Too Big to Fail	141	(5)
14 Summary: Talking Points on Too Big to Fail	146	(3)
APPENDIXES
A FDICIA: An Incomplete Fix	149	(10)
B Penalizing Policymakers	159	(9)
C Supervision and Regulation	168	(11)
D Increasing Market Discipline	179	(18)
References	197	(26)
Index	223