Banks “too big to fail”: should be saved?

FOREXBanks are essential components of the global economic system. For the most of the time banks are fundamental for economic, sometimes can happen a bank is like a brake for economic growth. This is the case of economic crisis started in 2008: many banks, especially those who bought toxic assets, risk (or end up in) bankruptcy, such as Lehman Brothers own in 2008.

However, there are lots of banks called “Too big too fail“, what it does mean? Why those banks cannot fail? These banks are considered to be so pervasive and their “personal” interests join those of lots of people, both employee and saver. Let those bank fail will have negative impacts on all of those people and the economy in general. We can also say there is a sort of social value linked to the existence of these banks.

On the other hand, saving those banks cost to the saver lots of money, as usually they look for help to governments, which takes money from taxes paid by population. The fact is that a bank “too big to fail” which is going to risk bankruptcy does not have a good economic situation, so until it is improved the cost of saving is on population and on their wallet.

The final question is: banks “too big to fail should be saved or is best to let them fail? Well, the question is quite tricky and maybe there is no right solution for that, maybe it depends by each situation, both of the bank itself and the economy around it.

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