BAILING out financial institutions deemed “too big to fail” has become wildly unpopular, as people across the political spectrum are now talking about splitting up America’s large banks. But such breakups are probably not the best way forward, because they would penalize size instead of failure.In light of the financial chaos after Lehman Brothers’ collapse in 2008, companies of its size are now often considered too big to fail. Yet before its collapse, Lehman had a capitalization of about $60 billion, compared with the $143 billion capitalization of JPMorgan Chase last week.
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