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The
current approach to the financial crisis,
of resolving small and medium size banks
through the FDIC while giving direct and
indirect government support to the banks
that are considered too large to be wound
up, has created an even smaller number
of even larger banks. However, there are
at least three separate problems associated
with bank size that suggest that this
approach may not reduce the systemic risks
of large financial institutions that contributed
to the current crisis.
Janurary 4, 2010.
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