Large banks and community banks

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The four largest U.S. Commercial Banks (JP Morgan Chase, Citigroup, Wells Fargo and Bank of America) are considered "Too Big To Fail," or TBTF. This means that a failure of one of these financial institutions would cause too great of a shock to the economy of the United States to be permitted. The perception, quite accurately based on prior government actions, is that if any one of them were in danger of failing, the government would provide "bail out" funds.

Identify and discuss some of the advantages that the TBTF designation gives these banks over other large banks and community banks that are not considered by regulators as TBTF?

Should these advantages be allowed? If not, what should/can be done to prevent TBTF?

Reference no: EM13821704

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