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.

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