Too big to fail : the hazards of bank bailouts / Gary H. Stern, Ron J. Feldman.

Format:

Book

Author/Creator:

Stern, Gary H.

Contributor:

Feldman, Ron J.

Language:

English

Subjects (All):

Bank failures--United States.

Bank failures.

Bank failures--Government policy--United States.

Banks and banking--State supervision.

Banks and banking.

Intervention (Federal government).

Physical Description:

1 online resource (246 p.)

Edition:

1st ed.

Place of Publication:

Washington, D.C. : Brookings Institution Press, c2004.

Language Note:

English

Summary:

The potential failure of a large bank presents vexing questions for policymakers. It poses significant risks to other financial institutions, to the financial system as a whole, and possibly to the economic and social order. Because of such fears, policymakers in many countries--developed and less developed, democratic and autocratic--respond by protecting bank creditors from all or some of the losses they otherwise would face. Failing banks are labeled "too big to fail" (or TBTF). This important new book examines the issues surrounding TBTF, explaining why it is a problem and discussing ways of dealing with it more effectively. Gary Stern and Ron Feldman, officers with the Federal Reserve, warn that not enough has been done to reduce creditors' expectations of TBTF protection. Many of the existing pledges and policies meant to convince creditors that they will bear market losses when large banks fail are not credible, resulting in significant net costs to the economy. The authors recommend that policymakers enact a series of reforms to reduce expectations of bailouts when large banks fail.

Contents:

Introduction : our message and methods

What is the problem?

Why protection is costly

How pervasive is TBTF?

Why protect TBTF creditors?

The growth of TBTF protection

Testing our thesis : the cases of not too big to fail

Can the problem be addressed?

Creating the necessary foundation

Reducing policymakers' uncertainty

Limiting creditor losses

Restricting payment system spillovers

Alternatives for managing too big to fail

Summary : talking points on too big to fail.

Notes:

"With a new preface."

Includes bibliographical references and index.

ISBN:

9780815796367

0815796366

OCLC:

55942225