Is Too-Big-To-Fail Too Precarious for America's Economy?

'Too Big to Fail', HBO's movie rendition of Andrew Ross Sorkin's book, delves into the financial crisis of 2008. The dramatic rendition of the book does an excellent job showing the general public how real and scary the crisis was and just how close we came to seeing the financial sector fail. The movie stresses that ignoring the crisis would have been detrimental to the global economy, and therefore failing banks were forced to merge with healthy banks. Sorkin clearly illustrates his belief that government intervention was necessary, or things would have become much worse.

Many now question whether the issue from the beginning was the mere fact that these banks were deemed too big to fail. Perhaps, we should be breaking up these banks and separating the basic banking services from their riskier endeavors to avoid another crisis like the one in 2008. I believe this is something we should look into, rather than hoping that these banking giants will not fail again. In a Washington Post article, Neil Irwin writes that "banks with trillions of dollars in assets, sprawling global operations that may be too complex to manage", but those assets will also guarantee that the government cannot and will not let them fail. Breaking up the banks appears to be a logical way to reduce the risk of failure, and decrease the extremely damaging impact of failure if it does happen again. 

Annie Howard
Sources:

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/05/the-case-for-the-too-big-to-fail-banks/