Too big to fail vs. too small to succeed

I am so tired about hearing too big to fail and the banks. Ever since the US financial markets imploded in 2008, the hew and cry went up against big banks that the government was forced to bail out. No one mentions that US government policies put those banks at risk and no one was complaining when the markets were soaring.

Now big banks, or anything BIG, is looked at as a major problem since they might have to be bailed out again. And, this is possible since the banks are confronted with ultra low interest rates, constant government interference, and stress tests that everyone seems to pass anyway.

So to big to fail means lets think small. So, it is okay for small banks to fail? Are there no consequences to small failures only large ones. Does the failure of 25 small banks not equal the failure or one large bank? Won’t the government have to bail out small failures?

Has someone repealed the law of economies of scale?

I am not saying that there should be monopolies or even oligarchies, but demonizing large banks isn’t constructive. There always have been large and small and to hammer large banks where most of the US population has their money isn’t “fair.”

 

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