Too Big to Fail

Recently, the feds have bailed out Fannie Mae, Freddie Mac, Bear Sterns and AIG, all on the grounds that they were “too big to fail.” Here’s my question: why do we let these companies get too big? Seriously. The feds routinely review mergers between companies on anti-trust grounds. But do they ever say halt a merger on the grounds that the resulting company would be too big or vital to bail out if it came to that? It seems like a reasonable metric to use.

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