Breaking Up Is Hard to Do: Why American Banks Remain Too Big to Fail

Abstract

The 2008 Financial Crisis pushed the American economy to the brink of disaster. Fearing Great Depression-like consequences, the federal government bailed out several banks deemed “too big to fail.” During the ensuing period of reform there were frequent calls to assure that taxpayers would never again be on the hook to save an institution because of the risk its size posed to the nation’s economic health. The Dodd-Frank Act of 2010 promised to end this “too big to fail” phenomenon and increased regulatory requirements for banks. Still, in the decade after the crisis, America’s biggest banks have only grown larger. This Note highlights that concerns about the size and power of financial institutions are a recurring theme in American history and argues that our current options to force the divestiture of banks are inadequate to ensure that no bank is “too big to fail.”