Too big to fail after all these years
By: Donald P. Morgan, Kevin J. Stiroh.
Contributors: Stiroh, Kevin J.; Federal Reserve Bank of New York.
Series: Staff reports ;; no. 220; Staff reports (Federal Reserve Bank of New York : Online) ;; no. 220.
Publisher: Federal Reserve Bank of New York
Published: 2005
Place of publication: [New York, N.Y.]
Language: eng
Format: Electronic resource
Subjects: Bank stocks; Bonds; Shareholders
Description: "The naming of eleven banks as too big to fail (TBTF) in 1984 led bond raters to raise their ratings on new bond issues of TBTF banks about a notch relative to those of other, unnamed banks. The relationship between bond spreads and ratings for the TBTF banks tended to flatten after that event, suggesting that investors were even more optimistic than raters about the probability of support for those banks. The spread-rating relationship in the 1990s remained flatter for TBTF banks (or their descendants) even after the passage of the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), suggesting that investors still see those banks as TBTF. Until investors are disabused of such beliefs, investor discipline of big banks will be less than complete."--Federal Reserve Bank of New York web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on 10/27/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.