The 1970s Origins of Too Big to Fail

George Nurisso and Edward Prescott

Economic Commentary, 2017, issue October

Abstract: In 1972, bank regulators bailed out the $1.2 billion Bank of the Commonwealth partly because they viewed it as ?too big to fail.? We describe this bailout and subsequent ones through that of Continental Illinois in 1984 and use the descriptions to draw lessons about too-big-to-fail policy. We argue that some of the same issues that motivated bailouts during this earlier period, particularly worries about banking concentration, are relevant today.

Keywords: bailouts; Too Big to Fail; bank failures (search for similar items in EconPapers)
Date: 2017
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