Bernanke told reporters that the lingering concern about whether the nation’s biggest financial institutions are perceived as enjoying a government lifeline is still a challenge for regulators. He added that while new tools created by the Dodd-Frank financial reform law are aimed at addressing the issue, further action may be needed to put the matter fully to bed.
“I don’t think ‘too big to fail’ is solved now. We’re doing a number of things which I think will help,” he said. “If we don’t achieve the goal, I think we’ll have to do additional steps … it’s not just something we can forget about.”
Bernanke and other regulators have been pressed by lawmakers in both parties about whether big banks still enjoy the implicit backing of the U.S. government since the financial crisis. And while regulators and Dodd-Frank backers insist the law provides the tools to prevent future bailouts, Bernanke acknowledged that the perception has persisted to some degree.
“Too big to fail was a major source of the crisis, and we will not have successfully responded to the crisis if we do not address that issue successfully,” he said.
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