Editorial Board
There's Still No Good Way to Let a Big Bank Fail
A new Treasury report shows why ample equity is so important.
Go ahead, try.
Photographer: Troy Harvey/BloombergOnce upon a time, President Donald Trump vowed to “do a very major haircut” on the Dodd-Frank Act. After a lengthy review, his officials have apparently concluded that the 2010 law’s approach to the failures of large banks was about right. In some ways, this reversal is a pity.
The 2008 crisis showed how dangerous it can be to let a big, interconnected financial institution go bust. When the U.S. tried that with Lehman Brothers, the repercussions were disastrous. Within months, the government was supporting vast swathes of the financial industry, including money-market mutual funds, AIG and the country’s largest banks.