Eugene Fama: 'Too Big To Fail' Perverts Activities And Incentives
The Baseline Scenario:
In our continuing financial debate, one of the central myths - put about by big banks and also not seriously disputed by the administration - is that reigning in "too big to fail" banks is in some sense an "anti-market" approach.
Speaking on CNBC at the end last week, Gene Fama - probably one of the most pro-market economists left standing - pointed out that this view is nonsense. (The clip is here, and also on Greg Mankiw's blog; TBTF is the focus from about the 5:50 minute mark.)