Too Big To Fail Essay Example | Topics and Well Written Essays - 1500 words - 1

Too Big To Fail - Essay ExampleIn addition, these large financial firms control the backbone of the preservation. Their failure would lead to a financial crisis that would affect members of the American society (Hughes and Mester 12).The concept of Too Big to Fail has two phases. The first phase is the positive feeling that these large firms have on the economy. A large firm is very complex and organized, and as such, provides many economic opportunities to both the country and its citizens, such as employment, economies of scale, and better service delivery. On the other hand, it has a negative phase whereby their failure would bring down the economy to a standstill. For instance, all the small firms that wager on these big firms will also collapse, and their employees will be jobless. There would be no capital flowing through the economy considering the economic crisis caused by the failure of these big firms. As such, the government takes required steps to eradicate these ri sks by supporting these big firms with a bail bondout whenever they are in crisis. However, they use taxpayers money, which is other burden to the country (Feldman and Stern 13).The Freeman newspaper article discussed the concept at one demonstrate in time whereby analysts argued over the inclusion of the concept in the banking sector. The introduction of the concept in 1984 to the economy of the United States and especially to the banking sector in the country emerged after the failure of the Continental Illinois. This failure take to a massive economic crunch in the country, and as such, the government took proactive steps to bail out the bank. By introducing the concept, the US government overlooked the reasons why the bank failed in the first place. As such, the concept only worsened the banking condition in the country, instead of the remedy it was to provide, as practitioners in the banking