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Examining If Banks Are too Big To Fail

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Examining If Banks Are too Big To Fail

Economy

Examining If Banks Are too Big To Fail

Examining If Banks Are too Big To Fail

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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?"