Too-Big-To-Fail As A Shadow Poison Pill
Aside from putting the economy at risk (and taxpayers in particular), banks that are seen as too big to fail have an unfair advantage over smaller banks because the perceived government backstop reduces their funding costs. Harvard Law School professor Mark Roe argues that the too-big-to-fail subsidy also acts as a ‘shadow poison pill’ that makes corporate restructuring a losing proposition.
“An operationally successful restructuring of such a too-big-to-fail financial firm will increase the . . .
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