Are Banks Still Too Big to Fail?

The U.S. banking industry has had its best quarter since 2006 with industry earnings of $37.6 billion, up 6.6 percent year-over-year, and with net operating revenues up $4.9 billion from 2011.

Not everything was up though, as banks set aside $3.8 billion less to protect themselves against losses. That’s 20.6 percent less than last year, and that could be a bad sign of incautious behavior on the edge of the fiscal cliff.

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While some may say we no longer need to worry about banks being “too big to fail,” the Fed’s own William Dudley, president of the Federal Reserve Bank of New York, says that these dangerously large banks are still around, many receiving government subsidies that encourage them to grow. Dudley encourages continued reform to be rid of the dangers.

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