Megabanks Will Shrink, Bernanke Tells Financial Crisis Commission, Yet Doubts Over Too Big To Fail Remain

Shahien Nasiripour
HuffPost
First Posted: 09- 3-10

In one of his most definitive statements on the subject to date, the nation's central banker said Thursday that he expects some of the nation's megabanks to start getting smaller.

"The most important lesson of this crisis is we have to end Too Big To Fail," Federal Reserve Chairman Ben Bernanke testified before the Financial Crisis Inquiry Commission. "My projection is that, even without direct intervention by the government, that over time we're going to see some breakups and some reduction in size and complexity of some of these firms as they respond to the incentives created by market pressures, and regulatory pressures as well."

Throughout the legislative slog toward financial reform, Bernanke -- like the Obama administration -- resisted congressional efforts to break up the handful of too-big-to-fail firms that dominate the financial system. In May, however, a third of the Senate voted to effectively bust up the biggest of those giant financial institutions.

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