I believe the notion of “Too big to fail” still exists today. As we have learned from the recession and the fall of Lehman Brothers, the few major banks have a colossal affect on the economy. Due to the massive amount of power these banks possess, it is imperative to keep the financial system sound and resilient, even if this means government intervention. The influence these banks have is very far stretching, reaching areas beyond Wall St. For example in the video it reveals due to the Lehman Brother’s struggle, there were catastrophic consequences in European banks and even GE was having trouble funding their day-to-day operations.
The government tried to prove a point to these major banks when it refused to bail out Lehman Brothers. Instead of using government money, there was a push to get other bigger banks to step up and help. I found this scene very thought provoking when the CEOs from all the banks met to try to find a solution. The film reveals the way these big banks are intertwined. For example Merrill Lynch knew they would be the next to go if Lehman Brothers died.
Michael Snyder’s article, “Too Big To Fail Is Now Bigger Than Ever Before,” reveals the amount the banks have grown since the financial crisis. Big banks are gaining more power and putting smaller banks out of business. The six largest banks, JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, Morgan Stanley and Well Fargo, have grown 37% in the last five years and control 67% of U.S.’s banking assets. We saw the affects of these large banks’ recklessness in 2008, and due to their growth, the negative consequences would be even larger today. These enormous banks basically control our economy and staff over a million people. I agree Wall St. has a gambling problem and if this problem becomes too big and we face another possibility of what happened in 2008, it is crucial for the government to address these problems. At times it seems these banks feel invincible due to their power.