"A landmark study by Federal
Reserve economists found that large U.S. banks enjoy a "too-big-to-fail"
advantage in financial markets, confirming the suspicions of many Wall
Street critics more than five years after the financial crisis.
The
series of research papers, published on Tuesday by the U.S. central
bank's influential New York branch, suggests the biggest and most
complex banks benefited even after the financial crisis from lower
funding and operating costs compared to smaller firms. The researchers
used data through 2009.
series of research papers, published on Tuesday by the U.S. central
bank's influential New York branch, suggests the biggest and most
complex banks benefited even after the financial crisis from lower
funding and operating costs compared to smaller firms. The researchers
used data through 2009.
The biggest banks also, Fed economists found, can take bigger risks than their smaller peers.
While
the study did not pinpoint the reason big banks borrow more cheaply,
Wall Street critics say it is because investors believe the U.S.
government would again rescue them in a panic, despite new rules adopted
in the wake of the 2007-2009 crisis and aimed at avoiding future
bailouts."
the study did not pinpoint the reason big banks borrow more cheaply,
Wall Street critics say it is because investors believe the U.S.
government would again rescue them in a panic, despite new rules adopted
in the wake of the 2007-2009 crisis and aimed at avoiding future
bailouts."
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