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One goal of the regulatory reforms that followed the 20072009 financial crisis was to address the toobig-to-fail problem associated with large institutions. How did the
One goal of the regulatory reforms that followed the 20072009 financial crisis was to address the "toobig-to-fail" problem associated with large institutions. How did the reforms try to address the problems? Why might they not be sufficient? The regulatory reforms attempt to limit the mechanisms for government bailouts. It does this through the following means: Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box. Subjects large institutions to regular stress tests Constrains Fed lending to individual banks Requires systemically important financial institutions (SIFis) to have living wills Limits the FDIC's guarantee powers The reforms may not be sufficient because: The government is fundamentally unwilling to undertake bailouts itself. The reforms do not clearly indicate that these large institutions cannot be bailed out. Investors may sense the government is unwilling to let these large institutions fail
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