Penn Wharton Public Policy Initiative

Publication Date

4-2013

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Volume

1

Number

4

Document Type

Brief

Summary

The Dodd-Frank Act does not provide sufficient protection against another major financial crisis. A better regulatory system would promote financial stability by correcting the key market failures that lead to excessive risk taking by Strategically Important Financial Institutions (SIFIs). Regulatory policies centered on contingent capital would offer a clearer and purer market signal when a SIFI is performing poorly and trigger steps to mitigate the financial risks.

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Regulating “Too Big to Fail”

Regulating “Too Big to Fail”

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