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Big To Fail Issue Is Research Paper

This is because their customers have no interest in dividing these groups of banks. The financial help provided by Wall Street banks and other important international banks to different customers, requires that these customers also offer their help in protecting these banks from authorities' actions. Another argument used by groups that are in the favor of too big to fail banks is represented by the fact that by attacking these banks, the businesses and governments they finance can be significantly affected. But there can be found solutions to such situations. Smaller banks can work together in order to finance important loans. However, this is not necessarily the most important argument that can be presented by advocates of the too big to fail issue because large banks provide this type of loan syndication also.

It is important to understand that both sides are right about some of the arguments they provide. It is obvious that the stakeholders in favor of the too big to fail banks' division are right about feeling the need to develop strategies intended to reduce the power of influence of these banks. But they must also provide solutions that are able to address the effects that this strategy can produce on companies, on national economies, and on the global economy.

In addition to this, such a strategy must be agreed by other countries also, it should not be limited to U.S. banks. Reports on the issue have revealed the fact that banks in Switzerland and in the U.K. have more difficulties in bailing out their banks in comparison with the U.S. It seems that the system in the U.S. can easier bail out large banks. This is not necessarily a good issue. Therefore, it is important to understand that the easy bail outs provided to large banks in the U.S. are possible because of several stakeholders involved in this process.

The federal governments that finance these bail outs represent the most important decision making factor in such cases. In addition to this, bank regulators and other types of regulators do not develop laws intended to protect the financial systems from the activity of...

The effects of these banks' activity on global level and their involvement in developing the financial crisis reveal the fact that the system in the U.S. does not favor the state's intervention on large banks.
In addition to this, when analyzing the too big to fail issue it is important to identify the value that these banks bring to the system. This is because the most important argument of too big to fail issue opponents' is that these banks must not be touched because of the imbalance this would cause to the system. But it seems that the value these banks provide cannot be quantified. In this situation, it is difficult to evaluate their importance.

However, there are several strategies that can be used in addressing the too big to fail issue. The most efficient strategy refers to dividing these groups of large banks. This is intended to reduce their power of influence in the system. In addition to this, the strategy must identify the categories of stakeholders that are affected by this issue. This is because the effects on these stakeholders must be evaluated in order to anticipate their reaction. Based on this evaluation, the federal governments and different types of regulators must develop strategies that allow them to narrow the freedom of banks, and to allow smaller banks to syndicate larger loans. It is important to also identify how this strategy is likely to influence these banks and their profits.

Reference list:

1. Elizabeth Warren: Too Big to Fail Has Become Too Big for Trial. America Blog. Retrieved March 2, 2013 from http://americablog.com/2013/02/elizabeth-warren-too-big-to-fail.html.

2. Irwin, N. (2013). The Case for the Too Big to fail Banks. The Washington Post. Retrieved March 2, 2013 from http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/05/the-case-for-the-too-big-to-fail-banks/.

3. Konczal, M. (2013). Does Doff-Frank Really End Too Big to Fail? The Washington Post. Retrieved March 2, 2013 from http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/02/does-dodd-frank-really-end-too-big-to-fail/.

Sources used in this document:
Reference list:

1. Elizabeth Warren: Too Big to Fail Has Become Too Big for Trial. America Blog. Retrieved March 2, 2013 from http://americablog.com/2013/02/elizabeth-warren-too-big-to-fail.html.

2. Irwin, N. (2013). The Case for the Too Big to fail Banks. The Washington Post. Retrieved March 2, 2013 from http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/05/the-case-for-the-too-big-to-fail-banks/.

3. Konczal, M. (2013). Does Doff-Frank Really End Too Big to Fail? The Washington Post. Retrieved March 2, 2013 from http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/02/does-dodd-frank-really-end-too-big-to-fail/.
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