Examining If Banks Are too Big To Fail

Washington has varied in its approach to allowing companies to fail: AIG has been deemed to big to fail while Bear Stearns and Lehman Brothers were not.

Now, the government appears to be taking over Citigroup on the assumption it is too big to fail, but dissenters such as Alabama Republican Sen. Richard Shelby say some big banks ought to be allowed to fail.

Economists are also divided over whether large institutions should be allowed to fail.

"We definitely want to get them on a path where they don't get walking along zombie-like, passing off bad loans and burning through taxpayer money," Adam Posen, of the Peterson Institute for International Economics, tells NPR's Robert Siegel.

Ken Rogoff, a professor of economics at Harvard University, disagrees.

"I think that the banks are going to need to go through some kind of receivership," he tells Siegel. "The question is how: How fast?"

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

Support comes from: