The world's largest financial institutions are not only too big too fail, says Nouriel Roubini, an economics professor at NYU's Stern School Of Business -- they are too big to save and too big to manage.
At a book signing in May for Roubini's most recent book, "Crisis Economics: A Crash Course In the Future of Finance", Roubini discussed our nation's financial behemoths and the importance of dismantling them.
While the debate in Congress over how to reform the regulation and supervision of financial institutions is going in the right direction, Roubini said, it isn't enough. "I would do something slightly more radical."
Because of their size, financial institutions are too big to be saved. "That's what is happening right now in Europe," he said. Here's more:
"You have financial systems that are on the brink, and because of the fiscal problems of the government, a government like Greece cannot even backstop it's own financial system because it doesn't have the fiscal resources...So the private debt crisis becomes a public debt crisis."
The mammoth size of financial institutions has also made them unmanageable, said Roubini. With the thousands of activities going on at major financial institutions, "there is no way that even the smartest CEOs or boards can monitor what is going on," he said.
Roubini added that the collapse of institutions like AIG and Citigroup has shown the model of the "financial supermarket" to be a failure, a sentiment shared by the Wall Street Journal in 2009.
Implicit and explicit guarantees for large financial institutions won't be eliminated by the current proposals to allow regulators to wind down failing firms, Roubini argued. "We're back to business as usual on Wall Street."
Watch Nouriel Roubini's comments here: