Explain Why Businesses Are Not Too Big To Fail Essay

672 Words2 Pages
bulb-icon

Recommended: What is human behaviour easy explanation

All humans must fail to succeed. This means that all people must make mistakes because none of us are perfect and we learn from our mistakes. We have to fall in order to grow. This also applies to businesses. Businesses fail just like people. Even though the end of a larger company may have a negative impact on the economy, big businesses are not too big to collapse; because when the government determines they are, they are subject to more regulation and must hold on to more capital which can be a problem.
The failure of big companies may result in economic disaster, but the government takes to strong of a position. After Judge Rosemary M. Collyer, said that MetLife is not too big to fail, Jacob J. Lew, the treasury secretary responded, “In overturning the conclusions of experienced financial regulators, the court imposed …show more content…

For example, when “A judge determined that the government’s process for designating MetLife a systemically important institution was not just “fatally flawed,” but seemingly purposely so. ‘Every possible effect of MetLife’s imminent insolvency was summarily deemed grave enough to damage the economy,’ Judge Rosemary M. Collyer wrote in her opinion” (Sorkin). In addition, G.E. does not like being too big to fail. “General Electric wants to be removed from the federal government’s list of too-big-to-fail financial institutions, arguing that it’s no longer a major.General electric doesn’t want to be part of the federal government because they won't let them fail and forced to keep the business going.The federal government will keep giving the company loans because the company is to big to fail. player in the financial institutions, arguing that it’s no longer a major player in the financial service industry” (Zarroli). According to (Zarroli)the financial institutions argue that it shouldn't be a major because it’s a

Show More
Related

  • Analysis Of Jpmorgan Chase, Bailouts, And Ethics

    601 Words  | 2 Pages

    “Too big to fail” is a theory that suggests some financial institutions are so large and so powerful that their failure would be disastrous to the local and global economy, and therefore must be assisted by the government when struggles arise. Supporters of this idea argue that there are some institutions are so important that they should be the recipients of beneficial financial and economic policies from government. On the other hand, opponents express that one of the main problems that may arise is moral hazard, where a firm that receives gains from these advantageous policies will seek to profit by it, purposely taking positions that are high-risk high-return, because they are able to leverage these risks based on their given policy. Critics see the theory as counter-productive, and that banks and financial institutions should be left to fail if their risk management is not effective. Is continually bailing out these institutions considered ethical? There are many facets that must be tak...

    Read More

  • Too Big To Fail Firms

    1554 Words  | 4 Pages

    In the world of money, firms including banks and nonbank financial companies face adversaries and often fail. When they do, most failures do not result in extreme externalities. In other words, loss of the firm does not place its counterparties into a troubled position. Ergo, the firm would go through a usual resolution process provided by the government. But, some large firms undergo a “special” treatment because of the government’s fear that its losses may have disproportionately big adverse externalities on the economy thus threaten the financial stability. These are the firms to which “too big to fail”, also known as “TBTF” apply. They are also referred to “too important to fail”, “too big to liquidate”, “too big to unwind and, most recently “too big to jail”. (Kaufman, 2013) Because of their capability to melt down the entire economy in the case of crisis, they are showered with public funding along with continuous bailouts. These unconditional supports have fostered generations and generations of controversy. The controversy dealt with in what extend should the government intervene with the financial firms, has it derived the economy to the desired result and flaws of this ironic concept.

    Read More

  • The Dodd-Frank Wall Street Reform and Consumer Protection Act

    1575 Words  | 4 Pages

    The presence of systemic risk in the current United States financial system is undeniable. Systemic risks exist when the failure of one firm may topple others and destabilize the entire financial system. The firm is then "too big to fail," or perhaps more precisely, "too interconnected to fail.” The Federal Stability Oversight Council is charged with identifying systemic risks and gaps in regulation, making recommendations to regulators to address threats to financial stability, and promoting market discipline by eliminating the expectation that the US federal government will come to the assistance of firms in financial distress. Systemic risks can come through multiple forms, including counterparty risk on other financial ...

    Read More

  • Considering Children Of Illegal Immigrants by Frosty Woolridge´s Article

    1056 Words  | 3 Pages

    ...may lose most of their employees which can cause these companies to collapse. Again the rate of unemployment will increase for US citizens and legal immigrants at large if these companies collapse.

    Read More

  • A Nation Of Wimps Summary

    1244 Words  | 3 Pages

    Failure and learning have a complicated, yet important relationship with each other. In ‘A Nation of Wimps’, Hara Marano writes about through trial and error humans can become successful. An article by Robert I. Sutton of the Harvard Business Review, talks about a method of learning from failures. Dr. Everett Piper describes in the article ‘This is Not a Day Care. It’s a University!’ that students who do not repent their sins can not learn from them. In the speech ‘This is Water’, by David Wallace he explains how learning to think is in a way knowing what to think about. An article by Bob Lenz titled ‘Failure Is Essential to Learning’ addresses the notion that failure is a key importance in the process of learning. Failure is an essential and important step in the difficult process of learning.

    Read More

  • Dbq Essay Examples

    1757 Words  | 4 Pages

    6) “We succeed in enterprises which demand the positive qualities we possess, but we excel at those which also make use of our defects.”

    Read More

  • William Zinsser The Right To Fail Summary

    538 Words  | 2 Pages

    William Zinsser’s article “The Right to Fail” discusses the unrealistic vision of success and failure that society has placed on itself. “The Right to Fail” is an excerpt from Zinsser’s book The Lunacy Boom which was published in 1970; this excerpt brings an awareness to the expectations that America places on young people and those who fail. Zinsser is speaking to a general audience of young and older people in America. The goal of this article is to change the way that society views achievements and failures. Rather than a setback, Zinsser sees failure as a way to learn and grown from the past; failure is meant to be used as tool to push society forward and improve things.

    Read More

  • Big Business: Democracy Or Corporatocracy?

    726 Words  | 2 Pages

    Big businesses “often use money as a motivator for the government to decide policies that would only benefit them. The more affluent they are, the greater are the chances that they will get their way,” (Startupbizhub.com). It is no secret that money plays a large role in politics. The American economy is overrun by a small amount of large corporations, also known as the Fortune 500. In 1988, the Fortune 500 companies had made over $2 trillion in sales alone. When the Chrysler Corporation and Continental Bank Corporation were faced with the possibility of bankruptcy, the federal government had stepped in to save them; this concept is known as the “too big to fail” doctrine. If a small business was faced with bankruptcy, the only thing government officials would be doing is putting up a bankruptcy notice. “Forces outside Congress influence what goes on inside it; in particular, if the Marxist theory is correct, Congress is influenced heavily by the economic structure of our society. those who dominate the American economy dominate Congress as well,” (Berg 214). John C. Berg proclaims that the companies who are undeniably dominating the American economy will have influence on the government, mostly the

    Read More

  • Nathan Wallace Failure

    221 Words  | 1 Pages

    That exact statement makes me or any reader feel that failure doesn’t always have to be perceived to be negative. Failure can improve personal growth. We are always scared out the outcome failure will bring, but that is the silver lining for our personal growth. If we concentrate more on the effort we put into a certain task, we can grow by the steps we take along the way. Anyone can succeed, no matter their

    Read More

  • Beyond If You Have Mastered, You Will Never Grow Analysis

    501 Words  | 2 Pages

    Analyzing that phrase you can assume that those individuals who have mastered in what they specify , whether its sports or academically related , have made many mistakes along the way. You should not be afraid of failure , as it helps one learn from past mistakes. Being able to recover from failure shows how dedicated

    Read More

  • 2008 Financial Crisis Essay

    1536 Words  | 4 Pages

    ... middle of paper ... ... The forced liquidation of some $3 trillion in private label structured assets has been deprived from the financial markets and the U.S. economy has obtained a vast amount of liquidity that the banking system simply cannot restore. It is not as easy to just assign blame within these cases, however it is noted that the credit rating agencies unethical decisions practices helped add onto the financial crisis of 2008 and took into account the company’s well-being before any other stakeholders.

    Read More

  • Too Big To Fail

    893 Words  | 2 Pages

    In previous years the big financial institutions that are “too big to fail” have come to realize that they can “cheat” the system and make big money on it by making poor decisions and knowing that they will be bailed out without having any responsibly for their actions. And when they do it they also escape jail time for such action because of the fear that if a criminal case was filed against any one of the so called “too big to fail” financial institutions it...

    Read More

  • Homoeopathy Essay

    608 Words  | 2 Pages

    If we fail, we may know that the failure is ours, in that we have not fully compassed the case or knowledge of the

    Read More

  • Essay About Failure

    1026 Words  | 3 Pages

    It’s best for people to experience failures to learn from them and never repeat them. The definition of failure would be “the lack of success.” Failures could range on how important they are. Some failures could be major and only affect a person in a small way. Some failures could affect a person on how the person views life or how the person lives it. An example of a small failure could be to check the milk expires to avoid drinking it. A person could of accidentally drank the rotten milk and then learned from that point on to check the expiration date instead of just drinking it. That failure wouldn’t be as important as other

    Read More

  • Essay On Success And Failure

    749 Words  | 2 Pages

    “The failure is the mother of success” this Chinese quote said that failure is not the end. Failure is where people learn from their mistake. People cannot be successful all the time. Indeed, there are many people who learned from their failures before being successful. Each failure that people had met is a helpful lesson and valuable experience to help them become a better person.

    Read More

More about Explain Why Businesses Are Not Too Big To Fail Essay

Open Document