The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

Are Big Banks ‘Too Big to Fail,’ Or Are They Just Too Complex to Regulate?

Posted on | April 4, 2010 | Comments Off on Are Big Banks ‘Too Big to Fail,’ Or Are They Just Too Complex to Regulate?

Taking as an example the 2008 bankruptcy of Lehman Brothers, Steve Randy Waldman at Interfluidity examines the difficulty of measuring the solvency of major financial institutions that deal in complex instruments.

It’s that “Knowledge Problem” that Professor Reynolds warned about.

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