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Crisis watch

As long as some US banks remain “too big to fail,” the global economy is at risk of another crash—and this one would be really serious

By Simon Johnson   May 2010

The world economy faces a major problem: the largest banks in the US remain “too big to fail,” meaning that if one or more of them were in serious trouble, they would be saved by government action—because the consequences of inaction are just too horrifying.

This problem is widely accepted, not just by state officials but by bankers too. In fact, there is near unanimity that fixing it is a top priority. Even Jamie Dimon, the powerful head of the very large JPMorgan Chase, says that “too big to fail” must end.

Unfortunately, the Obama administration’s proposed approach—now taken up…

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