Too Big to Fail and Related Problems: Financial Regulatory Research

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Ron J. Feldman, senior vice president for Supervision and Regulations, Federal Reserve Bank of Minneapolis, shares his thoughts on the value of the Burridge Conference in stopping future financial meltdowns as well as sharing insight from his book "Too Big To Fail: The Hazards of Bank Bailouts."

He then kicked off the annual Burridge Conference by describing the pros and cons of past and proposed future financial regulatory policies. The financial crisis and the resultant serious recession induced unprecedented expansion in the scale and scope of federal intervention in the credit markets.

Ron, co-author of the book "Too Big to Fail: The Hazards of Bank Bailouts," described the conflicting policy desiderata that were navigated when the Fed and Treasury's new initiatives were enacted. Short-term macroeconomic benefits do flow from bailouts and subsidies intended to prevent financial failure, and its transmission to more general business contraction. But that type of forebearance also demonstrates that future financial institutional failure is no longer as credible a disciplinary deterrent to excessive risk taking by top management. This tradeoff of short-term macroeconomic gains against the future costs of long-term "moral hazard" is the quandary faced by regulatory policymakers.

Category:

Education

Tags:

• Burridge Center
• Ron J. Feldman
• Ronald
• Too big to fail
• Leeds school of business