Insolvent and jeopardized the entire economy

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In 2008 and 2009, taxpayer money went to prop up banks that would have otherwise been insolvent and jeopardized the entire economy. This insolvency was due in part to banks' risky decisions (buying overly risky assets, running up high leverage ratios, etc.). In response, the government passed new restrictions on banks. Some people have argued that these regulations are unnecessary. If the government commits to letting all banks fail, then banks will not make risky decisions that might cause a recession. Do you agree with this argument? Why or why not?

Reference no: EM131564333

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