Plenty of banks are still too big to fail

 

Many banks remain too big to fail, and some are even bigger than they were before. Jeremy Hobson reports.

 

Karen Shaw Petrou at Federal Financial Analytics in Washington agrees many firms are still too big to fail. But she says putting a cap on size isn’t the answer. Banks, she says, will find a way around those caps and take just as much risk.  KAREN SHAW PETROU: It makes much more sense to force institutions to de-connect so that if one of them experiences problems, a whole row of dominoes doesn’t go down.  And on that score, she says, the Obama administration’s plan as proposed would do what’s needed to reduce systemic risk. Lawmakers expect a bill to be ready for the president’s signature by the end of the year.

 

Listen to the show:

 

http://marketplace.publicradio.org/display/web/2009/09/24/pm-citi/#

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