Too Big-headed to Fail

After watching “Too Big to Fail”, it is clear to me that this notion still exists today. The last piece of information you are left with is that 10 banks hold 77% of all American assets. Wow. These banks own more of our tangible country than the government does. These banks cannot fail. With our nation’s money invested in keeping them alive, another downward spiral will cause the government to loose all the money they had to save the banks this time around. The banks failing in the film were too big because they were responsible for pensions, salaries, life’s investment, college funds, etc. If these banks went under, too many lives would be affected. But now, it’s not very different. All of those same concepts apply but now the government’s money is invested. The banks cannot fail, because then our economy fails. The government would be too low on cash.

An issue I also saw at the end of the film was that the banks are not the only entities that are too big to fail. Our government seems the same way. Only the government seems too bigheaded to fail. In the movie, Paulson “stuck to his guns” about not giving bailouts and instead placed government investments into the banks, just so that he could keep his word. We even see it today with other issues as our government is “taking a break”. People cannot compromise and find solutions because they are stubborn. Yes, it is important to stand up for what you believe, but when your position effects the lives of an entire country, sometimes you need to think of the best interests of the general good, not what you personally believe to be good.


6 comments on “Too Big-headed to Fail

  1. I like the question you pose about why the government made the choices it did. There is one character in the film who seems to have a different response to the financial crisis. He asks, “What is the role of government?” while others are more focused on restoring the economy (especially in the short term) without adequately addressing this question. The way in which the government is defined should guide the actions is is permitted to take.

    • I agree with Haley…it’s interesting to think about the government’s role in regulating banks. Is more regulation necessarily better? Is the government and Wall Street too connected?

      • I feel the interconnectedness between the government and Wall Street is a necessary evil. With so much of America’s assets being in the top ten banks, the government needs to have their fingers all over their money in order to make sure it doesn’t start to disappear.

      • She makes a compelling argument, and I agree with the notion that compromises must me made. Regulation is a necessary force to keep the relationship between the two stable, and provide some distinction. For example, Dodd-Frank provides provisions to regulate the financial industry more closely, and stands as legislation to dictate what the private firms must do. Actions taken along these lines help reduce the risk of needing the public sector to bail out banks with the amount they have to lose. It should be the banks’ responsibility to watch out for themselves, and not depend on their connection to the government.

      • At this point, I feel its there’s no other option really. We saw what happened when things were deregulated… and now the banks are larger so if they failed there would be even bigger consequences.

  2. The big stakeholder issue really is that the collateral damage affects lots of people, So, what may have seemed like business decisions are actually much more.

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