Question: 12. As the Choice & Consequence box on Too Big to Fail notes, bank regulators worry about the prospect of the failure of large financial

12. As the Choice & Consequence box on “Too Big to Fail”

notes, bank regulators worry about the prospect of the failure of large financial institutions, dubbed “systemically important financial institutions” (SIFIs).

a. How would the failure of a SIFI affect the economy?

b. What steps do bank regulators take to prevent SIFIs from failing or to minimize the effect of such failures?

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