05-17-2014, 02:25 AM
Large banks have significantly grown in size, and become more involved in market-based activities since the late 1990s. Figure 1 shows how the balance sheet size of the world’s largest banks increased two to four-fold in the 10 years prior to the crisis. Figure 2 illustrates how banks shifted from traditional lending towards market-oriented activities.
Are Banks Too Large? Maybe, Maybe Not | iMFdirect - The IMF Blog
The answer, now widely accepted but clearly not appreciated sufficiently at the time, is that the 2008 crisis was made possible by an extremely fragile financial system in which banks and many other businesses indulged in excessive leverage—too much borrowing—as well as hazardous reliance on short-term funding and negligent risk management, with lax regulatory supervision by the government.1
The Right Way to Control the Banks by Roger E. Alcaly | The New York Review of Books