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The bailouts in the late 1997 of LTMC, the original, over leveraged, interconnected, arrogant, mathematical model dependant, "too big to fail"super bank, are what caused the need for bailouts in 2008. More than the repealing of GS, the 1997 LTMC bailouts created a decade of banks that knowingly overexpanded, collected the big gains and left the tax payers holding the bag when the equally huge losses fell upon them.
Since the government has shown that it will always cave and give bailouts to firms that they consider "too big to fail," the only solution is toeither ban or create incentives against any financial institution reaching a size that would put them in the "too big to fail" club. Therefore,either banning it outright or taxing a bank for becoming very large and interconnected is the best solution available given the lousy state of our policymakers.
Since the government has shown that it will always cave and give bailouts to firms that they consider "too big to fail," the only solution is toeither ban or create incentives against any financial institution reaching a size that would put them in the "too big to fail" club. Therefore,either banning it outright or taxing a bank for becoming very large and interconnected is the best solution available given the lousy state of our policymakers.