ROANOKE, Va. — Federal Reserve Bank of Richmond president Jeffrey Lacker said Thursday that the federal financial-safety net needs to be “credibly” limited and “significantly scaled back” to prevent firms from continuing to take excessive risks in the expectation of a government bailout in the event of loss.
Lacker said this may mean allowing some firms regarded as “too big to fail” to go under. He acknowledged that doing so would cause “short-term disruptions,” but said the long-term benefits would be “quite large.”
