Viewing some institutions as “too big to fail” creates a competitive advantage that will lead to “an ongoing moral-hazard problem” and market structure “distortions,” Federal Reserve Bank of New York president and chief executive officer William Dudley said yesterday.
“Currently, some large systemically important institutions may have a competitive advantage because they are perceived to be 'too big to fail,’ ” Dudley told an Institute of International Bankers luncheon, according to a prepared text released by the Fed.
“Unless we address this disparity, we will have an ongoing moral-hazard problem and inevitable market-structure distortions as institutions take steps to become systemically important in order to gain a competitive advantage.”
