The Politics of Too Big To Fail

This presentation provides an overview of national government and European Union (EU) regulatory responses to the financial crisis in terms of their contribution to decreasing the risks associated with too-big-to-fail banks (TBTF). This presentation examines four European countries with large banking sectors both in terms of total assets and assets to GDP — respectively, the UK, Germany, France and Netherlands — EU-level regulatory developments and, by way of comparison, the US. All five countries had large banking systems that were severely impacted by the 2008 crisis, necessitating huge government bailouts and generating significant political pressure to tackle TBTF banks. Only a few of the reforms adopted during the decade following the financial crisis — principally the US and UK structural reforms — likely made a significant contribution to tackling the problem of TBTF.