Financial Institutions

This discussion covers the major policy discussion regarding the size of financial institutions.

With very large financial institutions, we have had the need for government intervention when certain banks were in severe financial difficulty. In the financial crisis of 2007-2009, one of the issues was Too Big to Fail,where several banks were deemed to be too important for the economy to let them fail and the government provided substantial loans to support those banks.

Find an article by doing a search on the concept of “Banks too Big to Fail.” Respond to the following: Post a citation and a short summary of the article that you found.

Describe the problem from the standpoint of how concentration of market power in very large banks affects the overall economy.

Analyze the effects of government policy in the market for loanable funds and the effect this has on both individuals and businesses.