But look, it wasn't like he didn't know that after so many acquisitions and mergers large banks were swelling up like so many big, fat, overinflated water balloons, the former Federal Reserve chairman explained in a 48-page paper to be presented at the Brookings Institute tomorrow. He's not daft. It was that he, er, just kind of neglected to do very much about it.
For years the Federal Reserve had been concerned about the ever larger size of our financial institutions. Federal Reserve research had been unable to find economies of scale in banking beyond a modest-sized institution. A decade ago, citing such evidence, I noted that “megabanks being formed by growth and consolidation are increasingly complex entities that create the potential for unusually large systemic risks in the national and international economy should they fail.” Regrettably, we did little to address the problem.
It's kind of like when you say, "I should really deal with laundry before I have no underwear left," but you're busy and you put it off and then, yep, that happens. Only, you know, bigger.
PDF via [NYT]