Leverage and Incentives
The discussion highlights how the perception of being "too big to fail" can create a natural incentive for individuals to increase their leverage. With a significant cushion of personal assets, the temptation to take riskier bets grows, as creditors may feel reassured by the likelihood of a government bailout. This dynamic raises important questions about the implications of such behavior on financial stability and risk management.In this clip
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EconTalk
Gary Stern on Too Big to Fail
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