“In testimony to the Senate Banking Committee this week, Ben Bernanke made a clear statement acknowledging that very large American banks receive implicit subsidies because the market believes they are too big to fail. This was one of the most forthright public statements on this topic by a top Fed official, and Mr. Bernanke should be congratulated for being honest and direct on this important point.
“Unfortunately, when it came to discussing how to bring down this subsidy – and addressing the problem of “too big to fail” financial institutions – Mr. Bernanke’s answers were disappointing.
“Mr. Bernanke was pressed hard on these topics by Senator Elizabeth Warren, a Massachusetts Democrat – you can watch a clip of their exchange. The concerns that Senator Warren expressed are shared by some across the aisle – including Senator David Vitter, a Louisiana Republican, who said at the hearing, “There is growing bipartisan concern across the whole political spectrum about the fact — I believe it’s a fact — that ‘too big to fail’ is alive and well.””
Read Simon Johnson’s full New York Times article here