Bank Failures in the Major Trading Countries of the World: Causes and Remedies

By Benton E. Gup | Go to book overview
Save to active project

5

Too-Big-to-Fail: An International Perspective

THE DOCTRINE

Banks

The ‘‘too-big-to-fail’’ (TBTF) doctrine received widespread public attention in 1984 when U.S. bank regulators intervened in the case of Continental Illinois Bank because they feared that its failure might cause a systemic crisis. Comptroller of the Currency Todd Conover announced in congressional testimony that the government would not let the eleven largest banks fail. As applied to banks in the United States, the TBTF doctrine means that the organization may continue to exist, and insured depositors will be protected; but stockholders, subordinated debt holders, managers, and some general creditors may suffer losses. 1

Continental Illinois had assets of $41 billion, and it held the deposits and federal funds of more than 2,000 correspondent banks. Of that total, 200 had balances greater than their net worth (Kaufman, 1990). William Seidman, chairman of the FDIC at that time, said, ‘‘Nobody really knows what might happen if a major bank were allowed to default, and the opportunity to find out is not one likely to be appealing to those in authority or to the public’’ (Dale, 1992, 10).

The main concern with banks is that their widespread failure could

-69-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited page

Bookmark this page
Bank Failures in the Major Trading Countries of the World: Causes and Remedies
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen
/ 175

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?