The latest set of prudential rules is the strongest sign yet that too-big-to-fail has seen its last days -

Despite the comprehensive reforms put in place in the wake of the financial crisis by the landmark Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the concept of too-big-to fail (TBTF) remains a highly politicised issue. The origin of TBTF is often traced to the bailout of Continental Illinois National Bank in 1984 and subsequent testimony by then Comptroller of the Currency CT Conover that regulators would not be able to liquidate the 11 largest US banks. Notwithstanding the source, TBTF has struck a chord in American politics that has been long invoked by presidential candidates including Andrew Jackson in 1832 (describing the Second Bank of the United States as a “hydra of corruption”), William Jennings Bryan in 1896 and Bernie Sanders in 2016 (telling Wall Street that greed is not good”)...

Originally published in IFLR - March 2016.